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dsp73
2 years ago
12

Golddex Corporation has decided to sell some old equipment to make room for a new project. The salvage value of the equipment is

$220,000. The firm would be able to recover $60,000 in working capital when the equipment is sold. Their tax rate is 21%. The old equipment has a book value of $140,000. What is the terminal cash flow?
Business
1 answer:
never [62]2 years ago
7 0

Answer:

The correct answer is $263,200.

Explanation:

According to the scenario, the given data are as follows:

Salvage value =$220,000

Working capital = $60,000

Book value = $140,000

Tax rate = 21%

So, Gain on disposal = Salvage value - Book value

= $220,000 - $140,000 = $80,000

Now, Tax paid on gain on disposal value = Gain on disposal × tax rate

= $80,000 × 21% = $16,800

So, Salvage value after tax = Salvage value - Tax paid on gain on disposal value

= $220,000 - $16,800

= $203,200

So, we can calculate the terminal cash flow by using following formula:

Terminal cash flow = Salvage value after tax + Working value

= $203,200 + $60,000

= $263,200

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false: it means you dont have to agree with them but you have to respect their opinion

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Igoryamba

Answer:

Debit cash $3,390

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Explanation:

Preparation of the journal entry to record the information given.

Journal entry

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3 0
3 years ago
Gabriel Company views share buybacks as treasury stock. In its first treasury stock transaction, Gabriel purchased treasury stoc
denis23 [38]

Answer:

b. decrease no effect

Explanation:

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Retained earnings on the other hand are unaffected by this transaction as long as the company has enough funds in the paid in capital account to complete the transaction.

Total paid in capital will decrease

Retained earnings will have no effect

Hope that helps.

5 0
2 years ago
You want to create a portfolio equally as risky as the market, and you have $500,000 to invest. Information about the possible i
Zarrin [17]

Answer:

Let investment in C = $x

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1 = (139,000/500,000*0.84)+(141,000/500,000*1.29)+(x/500,000*1.44)+(220,000-x)/500,000*0 [Beta of market=1 ;Beta of risk-free assets=0]

1 = 0.23352+0.36378 + (x/500,000*1.44)

1 = 0.5973 + (x/500,000*1.44)

x = (1 - 0.5973)*500,000/1.44

x = 0.4027*347222.22

x = 139826.387994

x = $139,826.39

investment in C = $139,826.39

Hence, investment in risk free asset = $(220,000-x)  = $220,000 - $139,826.39

Investment in risk free asset = $80,173.61

8 0
2 years ago
Ragas, Inc. sold goods with a selling price of​ $50,000 in the 2017 and estimated​ 5% warranty expense for the year. Customers c
Trava [24]

Answer:

D. Estimated Warranty Payable 1,500

    Merchandise Inventory ​1,500

When the Warranty is honored, the Estimated Warranty account is debited to show the claiming of the expense.

The relevant asset account which in this case is Merchandise inventory is credited to show that it's reduction.

8 0
2 years ago
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