Question
The owner of two pizza restaurants needs to buy a new pizza oven for each restaurant. Each oven costs $300,000 and is expected to last
The owner of two pizza restaurants needs to buy a new pizza oven for each restaurant. Each oven costs $300,000 and is expected to last 15 years.
a. Using the MACRS schedules in “Window 8.1: The MACRS Description Method”, determine the annual depreciation schedule for each oven over the first 5 years assuming a 15-year recovery period.
b. Determine the annual after-tax cash flow for the pizza restaurants over the first 5 years, assuming total cash inflows are a constant $1 million, total cash outflows are a constant $500,000, and the tax rate is 34%.
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Step: 1
a According to the MACRS schedules the property class for restaurant equipment is 575 which correspo...
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Data Analysis And Decision Making
Authors: Christian Albright, Wayne Winston, Christopher Zappe
4th Edition
538476125, 978-0538476126
