please help with question #12.24 without using excel.

Question #12-24

444 CHAPTER 12: INCOME TAXES FOR CORPORATIONS ment. Contributed by (b) Explain why the rate of return obtained in part (a) is different from the rate of return obtained in Problem 12-20. 12-22 A firm may invest in equipment that will be depreci ated by double declining balance depreciation with conversion to straight-line depreciation in year 5. For depreciation purposes a $700,000 salvage value at the end of 6 years is assumed. But the actual value is thought to be $1,000,000, and it is this sum that is shown in the before-tax cash flow. State University in car-washington e equipment by alance using your salvage value at the The firm is expect ow, after medling depreciation, combined corporate value, and Assume unit (a) Comput (b) Comput MACRS corporar 12-29 (a) The BV chased $30,000 income pany ha $9500 sold the eral and ct, and the equip Before-Tax Cash Flow fin $1000) X0,000 at the end of 5 Year would be Compu truck. (b) Hybrid -$12,000 1,727 2.414 2,872 3,177 3,358 1.997 1,000 Salvage value net present worth of this investment Mukasa Ssemakula, Wayne State Uni 12-25 A firm has invested $400,000 in ca ment. They will depreciate the equi bonus depreciation with the balanc MACRS, assuming a $50,000 salva end of the 5-year useful life. The fir to have a before-tax cash flow, after expenses of operation (except depreci $165,000 per year. The firm's combined tax rate is 28%. (a) If the projected income is correct, and the ment can be sold for $100,000 at the years, what after-tax rate of return would corporation receive from this venture? (b) Summarize the environmental impact of com mercial car washing. Include how wash Wate drainage is directed, how discharge sources are treated (or not), the impacts of sediment deter gents, waxes, and heavy metals, and local/state policies/practices. 12-26 A mining corporation purchased $120,000 of () production machinery and depreciated it using 40% bonus depreciation with the balance using 5-year MACRS depreciation, a 5-year depreciable life, and zero salvage value. The corporation is a profitable one that has a 22% combined incremental tax rate. At the end of 5 years the mining company changed its method of operation and sold the production machinery for $40,000. During the years the machinery was used, it reduced mine operating costs by $32,000 a year, before taxes. I the company MARR is 12% after taxes, was the investment in the machinery a satisfactory one! 12-27 Zeon, a large, profitable corporation, is considering adding some automatic equipment to its producto facilities. An investment of $120,000 will produce an annual benefit of $40,000. If the firm uses bonus depreciation with the balance using MACRS depreciation, an 8-year useful $12,000 salvage value, will it obtain the 12% after-tax rate of return? Assume equipment can be sold for its $12,000 salva at the end of the 8 years. Also assume a 20 lax rate for state and federal taxes combine If the firm wants a 9% after-tax rate of return and its combined incremental income tax rate is 24%, determine by annual cash flow analysis whether the investment is desirable. truck P for the Howey ative e key en emissio source hydrid life-cy 12-30 A chemica A $550,000; MACRS. the chemic company f also provi vessel at th of the 6 ye and bough a 24% cor 2-31 Bonus Depreciation Assume all bonus depreciation occurs in Year 1 unless otherwise stated. 12-23 A firm has invested $60,000 in machinery with a 5-year useful life. The machinery will have no salvage value, as the cost to remove it will equal its scrap value. The uniform annual benefits from the machinery are $15,000. For a combined 45% income tax rate, and 100% bonus depreciation, compute the after-tax rate of return. 12-24 A farmer bought a new harvester for $120,000. The harvester's operating expenses averaged $10.000 per year but the harvester saved $40,000 per year in labor costs. It was depreciated over a life of 5 years using the 100% bonus depreciation method, assuming a salvage value of $30,000. The farmer sold the harvester for only $10,000 at the end of the fifth year. Given an income tax rate of 30% and a MARR rate of 5% per year, determine the after-tax S-year useful life, and obtain the desired Assume that the after-tax Xon, a si a new pet will depre drilling rig Xon $750 drilling ri combined MARR (a) Doest Salvage yake sume a 28% income MACRS Depreciation 12-28 A special power tool for A $400,000 and has a 4-year for plastic products cos car useful life, no salva 444 CHAPTER 12: INCOME TAXES FOR CORPORATIONS ment. Contributed by (b) Explain why the rate of return obtained in part (a) is different from the rate of return obtained in Problem 12-20. 12-22 Afirm may invest in equipment that will be depreci- A ated by double declining balance depreciation with conversion to straight-line depreciation in years. For depreciation purposes a $700,000 salvage value at the end of 6 years is assumed. But the actual value is thought to be $1,000,000, and it is this sum that is shown in the before-tax cash flow. State University in car-wasting coup the equipment by palance using Sye salvage valutate ve firm is expected ow, after meeting preciation), combined corporate 12-29 ect, and the equin Year - A Before-Tax Cash Flow (in $1000) -$12,000 1,727 2,414 2,872 3,177 3,358 1.997 1,000 Salvage value + net present worth of this investment Mukasa Ssemakula, Wayne State Uni 12-25 A firm has invested $400,000 in ment. They will depreciate the egu bonus depreciation with the balanc MACRS, assuming a $50,000 salvag end of the 5-year useful life. The firm to have a before-tax cash flow, after expenses of operation (except deprecia $165,000 per year. The firm's combined tax rate is 28%. (a) If the projected income is correct, and ment can be sold for $100,000 at the end years, what after-tax rate of retum would corporation receive from this venture? (b) Summarize the environmental impact of com mercial car washing. Include how wash Wate drainage is directed, how discharge sources are treated (or not), the impacts of sediment, deter- gents, waxes, and heavy metals, and local state policies/practices. 12-26 A mining corporation purchased $120,000 of production machinery and depreciated it using 408 bonus depreciation with the balance using 5-year MACRS depreciation, a 5-year depreciable life, and zero salvage value. The corporation is a profitable one that has a 22% combined incremental tax rate. At the end of 5 years the mining company changed its method of operation and sold the production machinery for $40,000. During the years the machinery was used, it reduced mine operating costs by $32,000 a year, before taxes. I the company MARR is 12% after taxes, was the investment in the machinery a satisfactory one! 1 2-27 Zeon, a large, profitable corporation, is com adding some automatic equipment to its product facilities. An investment of $120,000 will produce an annual benefit of $40,000. If the firm uses bonus depreciation with the balance using MACRS depreciation, an 8-year useful $12,000 salvage value, will it obtain the 12% after-tax rate of return? Assume equipment can be sold for its $12,000 salvage at the end of the 8 years. Also assume a 20 tax rate for state and federal taxes comb If the firm wants a 9% after-tax rate of return and its combined incremental income tax rate is 24%, determine by annual cash flow analysis whether the investment is desirable. 12- Bonus Depreciation Assume all bonus depreciation occurs in Year 1 unless otherwise stated. 12-23 A firm has invested $60,000 in machinery with a 5-year useful life. The machinery will have no salvage value, as the cost to remove it will equal its scrap value. The uniform annual benefits from the machinery are $15,000. For a combined 45% income tax rate, and 100% bonus depreciation, compute the after-tax rate of return. 12-24 A farmer bought a new harvester for $120,000. The harvester's operating expenses averaged $10,000 per year but the harvester saved $40,000 per year in labor costs. It was depreciated over a life of 5 years using the 100% bonus depreciation method, assuming a salvage value of $30,000. The farmer sold the harvester for only $10,000 at the end of the fifth year. Given an income tax rate of 30% and a MARR rate of 5% per year, determine the after-tax obtain the desired Assume that the W salvage value sume a 28% income MACRS Depreciation 12-28 A special power tool for play A $400,000 and has a 4-year S40pecial power tool for plastic products Dear useful life, no salva