Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem 7-19 (algorithmic) Question Help those four years of A company purchases an industrial laser for $128,000. The device has $55,000. The before-tax cash flow
Problem 7-19 (algorithmic) Question Help those four years of A company purchases an industrial laser for $128,000. The device has $55,000. The before-tax cash flow is estimated to be $70,000 per year. a. You, of course, suggested applying the 3-year MACRS (GDS) method instead of the straight-line method. Given an effective tax rate of 29%, determine the depreciation schedule and the after tax cash flow. b. Based on the MACRS depreciation schedule for this asset, if the industrial laser was sold for $70,000 in year two (consider year two table in Part (a), what will be the amount of gain (depreciation recapture) or loss on the disposal of the asset at the end of this year? useful life of 4 years and a salvage value (market value) at the end be the "year 2" row in the Click the icon to view the GDS Recovery Rates () for the 3-year property class. a. Determine the MACRS depreciation amounts and the after tax cash flow for this laser. Fill in the table below. (Round to the nearest dollar.) EOY Depreciation, $ ATCF, $ 0 -128,000 1 GDS Recovery Rates (r) for the Six Personal Property Classes Recovery Period (and Property Class) 15-year Year 3-yeara 5-yeara 10-yeara 7-year 20-yearb 0.3333 0.1000 1 0.2000 0.1429 0.0500 0.0375 2 0.4445 0.3200 0.2449 0.1800 0.0950 0.0722 0.1749 3 0.1481 0.1920 0.1440 0.0855 0.0668 0.0741 0.1152 4 0.1249 0.1152 0.0770 0.0618 5 0.0893 0.0922 0.1152 0.0693 0.0571 6 0.0576 0.0892 0.0737 0.0623 0.0528 7 0.0893 0.0655 0.0590 0.0489 0.0446 8 0.0655 0.0590 0.0452 0.0656 0.0591 0.0447 10 0.0590 0.0447 0.0655 11 0.0328 0.0591 0.0446 12 0.0590 0.0446 13 0.0591 0.0446 14 0.0590 0.0446 15 0.0446 0.0591 16 0.0295 0.0446 17 0.0446 18 0.0446
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