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Strike441 [17]
3 years ago
7

As asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $

6,400,000 and will be sold for $1,530,000 at the end of the project. If the tax rate is 34 percent, what is the after tax salvage value of the asset?
Business
1 answer:
Arlecino [84]3 years ago
5 0

Answer:

The after tax salvage value of the asset is $165.000.

Explanation:

If the asset has a depreciation period of 5 years it means that still there is a depreciation´s remanent of $ 1.280.000, if the asset it's sold at $1.530.000 at the end of the project, then the salvage value before taxes it's $250.000 consequently the after tax salvage value of the asset it's $ 165.000.

When company's asset it's for sale if there is yet a remanent value of depreciation it's the cost of sale of the transaction, if the depreciation it's zero then the sale it's a all gain to the company.

Please see details below:

Value of the Asset : $6.400.000

Anual Depreciation: $.1.280.000

Value of Sale:  $1.530.000

Cost of Sale : $1.280.000

Revenue : $250.000

Tax Rate:  - $85.000

Salvage value: $165.000

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elena55 [62]

Answer:

1. Issuer's cash is $262,500

2. Total amount of bond interest is $277,500

3. The amount of bond interest expense is $13,875.

Explanation:

1. Issuer's cash = Face Value × Selling Price

Issuer's cash  = $300,000 × 87.50%

Issuer's cash  = $262,500

2. Discount on bond = $300,000 × 12.5% = $37,500

Interest on bond = $300,000 × 8% = $24,000

Period of bonds= 10 years

Total amount of bond interest = Discount on Bond + (Interest on Bond  × period)

Total amount of bond interest = $37,500 + ($24,000  × 10)

Total amount of bond interest = $277,500

3. Discount on bond = $300,000 × 12.5% = $37,500

Interest on bond = $300,000 × 8% = $24,000

Period = 0.5 years

The amount of bond interest expense = (Discount of Bond ÷ 20) + Interest

The amount of bond interest expense = ($37,500 ÷ 20) + ($24,000 × 0.5)

The amount of bond interest expense = $1,875 + $12,000

The amount of bond interest expense = $13,875.

7 0
3 years ago
Which of the following is an example of a cash outflow?
Lyrx [107]

Answer: Option A

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Initial investment in a project is a cash outflow that will further result in cash inflows in form of returns.

Thus, option A is correct.

4 0
3 years ago
Help help help help pelsss please please business
kolbaska11 [484]
B because to much of a increase could hurt the economy
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2 years ago
ost Flow Relationships The following information is available for the first year of operations of Engle Inc., a manufacturer of
vredina [299]

Answer and Explanation:

The computation is shown below

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= $1,326,700 - $358,200

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= $1,464,700 - $22,600 - $578,400 - $49,100 - $119,400

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8 0
3 years ago
market supply schedules include all firms that sell a product in one market. TRUE ^ OR ^ FALSE ^ ???
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True.

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5 0
3 years ago
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