Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please rewrite the answer with same steps but with double decline method not MCORS method please rewrite the answers but with double decline method not
please rewrite the answer with same steps but with double decline method not MCORS method
please rewrite the answers but with double decline method not MACORS
= - Example of Asset Expansion To illatrate the information needed for a capital truderting decision, we cumine the followExility. To launch the facility. it will need to upend ssopoo for ipeciul equipment, The equipment has a useful life of four years and is in the threevear peopenty das for tax purposex. Shipping and installation expenditure equal \$10,000, and the machincry has an eqpected fial saldage value, bour years from now, of 516,300 . The mackinery is to be homed in an abundoned warchoese neat to the main proccuing plant. The old warchouse has no alternative coonomic use. No adfitional "int" working copital is needhed. The marketing department 12 Castal Budjeting and Elanatrog Cath Fiamb hefofe consideration of depteciation and raxes, as follims: Assuming thut the marginal tax rate equals 40 percest, we now need to estimate the project's eclecatest inctemental cash scomb. The fiest step is to estimate the propect's imitial cath cestlow: The next atepe inwolve calsulating the increntintal futare calh flows. benh er stopion Thus, for an initial cach entllow of sto0,009, the firm expects to geoerate net cach flows Example of Asset Expansion To illustrate the information needed for a capital budgeting decision, we examine the following situation. The Faversham Fish Farm is considering the introduction of a new fish-flaking facility, To launch the facility, it will need to spend $90,000 for special equipment. The equipment has a useful life of four years and is in the three-year property class for tax purposes. Shipping and installation expenditures equal $10,000, and the machinery has an expected final salvage value, four years from now, of $16,500. The machinery is to be housed in an abandoned warehouse next to the main processing plant. The old warehouse has no alternative economic use. No additional "net" working capital is needed. The marketing department envisions that use of the new facility will generate additional net operating revenue cash flows, before consideration of depreciation and taxes, as follows: Assuming that the marginal tax rate equals 40 percent, we now need to estimate the project's relevant incremental cash flows. The first step is to estimate the project's initial cash outflow: The next steps involve calculating the incremental future cash flows. Step C. Calculating terminalcyear fitcremental nst cach foow 'MACRS depreciation percentages fis 3.year property chess avet applied against asket with a deprectable: batis of 5100,000 . Huciens that tax loss shidds other income of the firm. 'Ausumes salvage value is zecapture of depreciatioa and texed at ardinary income rate of 40 percent 516,500(0.40)=$6,600 The expected incremental net cash flows from the project are = - Example of Asset Expansion To illatrate the information needed for a capital truderting decision, we cumine the followExility. To launch the facility. it will need to upend ssopoo for ipeciul equipment, The equipment has a useful life of four years and is in the threevear peopenty das for tax purposex. Shipping and installation expenditure equal \$10,000, and the machincry has an eqpected fial saldage value, bour years from now, of 516,300 . The mackinery is to be homed in an abundoned warchoese neat to the main proccuing plant. The old warchouse has no alternative coonomic use. No adfitional "int" working copital is needhed. The marketing department 12 Castal Budjeting and Elanatrog Cath Fiamb hefofe consideration of depteciation and raxes, as follims: Assuming thut the marginal tax rate equals 40 percest, we now need to estimate the project's eclecatest inctemental cash scomb. The fiest step is to estimate the propect's imitial cath cestlow: The next atepe inwolve calsulating the increntintal futare calh flows. benh er stopion Thus, for an initial cach entllow of sto0,009, the firm expects to geoerate net cach flows Example of Asset Expansion To illustrate the information needed for a capital budgeting decision, we examine the following situation. The Faversham Fish Farm is considering the introduction of a new fish-flaking facility, To launch the facility, it will need to spend $90,000 for special equipment. The equipment has a useful life of four years and is in the three-year property class for tax purposes. Shipping and installation expenditures equal $10,000, and the machinery has an expected final salvage value, four years from now, of $16,500. The machinery is to be housed in an abandoned warehouse next to the main processing plant. The old warehouse has no alternative economic use. No additional "net" working capital is needed. The marketing department envisions that use of the new facility will generate additional net operating revenue cash flows, before consideration of depreciation and taxes, as follows: Assuming that the marginal tax rate equals 40 percent, we now need to estimate the project's relevant incremental cash flows. The first step is to estimate the project's initial cash outflow: The next steps involve calculating the incremental future cash flows. Step C. Calculating terminalcyear fitcremental nst cach foow 'MACRS depreciation percentages fis 3.year property chess avet applied against asket with a deprectable: batis of 5100,000 . Huciens that tax loss shidds other income of the firm. 'Ausumes salvage value is zecapture of depreciatioa and texed at ardinary income rate of 40 percent 516,500(0.40)=$6,600 The expected incremental net cash flows from the project are Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started