BusinessCourse Menu Tanner N6 Not complete ts out of 62 ?Flagqueson After-Tax Ca
ID: 2529893 • Letter: B
Question
BusinessCourse Menu Tanner N6 Not complete ts out of 62 ?Flagqueson After-Tax Cash Flows Below is a list of aspects of various capital expenditure proposals that the capital budgeting team of Modern Systems, Inc., has incorporated into its net present value analyses during the past year. Unless otherwise noted, the iterns listed are unrelated to each other. Al situations assume a 30% income tax rate and a 10% mnum desred rate ofreturm. 1. Pre-tax savings of $5,000 in cash expenses will occur in each of the next three years. 2. A machine is purchased now for $82,000. 3. Special tools costing $45,000 will be depreciated $9,000, $18,000, and $18,000, respectively, on the tax return over a three-year l 4. A patent purchased for $330,000 will be amortized on a straight-line basis over 15 years on the tax return. No salvage value is expected 5. Pre-tax savings of $8,000 in cash expenses will occur in each of the next seven years. 6. Pre-tax savings of $5,500 in cash expenses will occur in the first, fourth, and seventh years from now 7. The special tools described in aspect 3 will be sold after three years for $10,000 cash. 8. A truck with a tax book value of $7,200 after two years will be sold at that time for $4,600 a Calculate and record in column A the related after-tax cash flow effect(s) ?. Indicate in column B the timing of each cash flow shown in column A Use Otoindicate imediately and 1, 2, 3, 4, and so on breach year involved The answer to investment aspect 1 is presented as an example. Use negative signs with answers that are cash outflows Under Column B, select the appropriate year for the timing of each cash fow using the drop down menu HYUNDAExplanation / Answer
Computation of the after-tax cash outflow/inflow effect.We have,
Investment Aspect After-tax cash inflow/outflow effect(s) Years of Cash Flow 1 5,000 - 5,000*30% $ 3,500 1 $ 3,500 2 $ 3,500 3 2 $ 82,000 0 3 9,000 - 9,000*30% $ 6,300 1 18,000 - 18,000*30% $ 12,600 2 18,000 - 18,000*30% $ 12,600 3 4 22,000 - 22,000*30% $ 15,400 1 22,000 - 22,000*30% $ 15,400 2 22,000 - 22,000*30% $ 15,400 3 22,000 - 22,000*30% $ 15,400 4 22,000 - 22,000*30% $ 15,400 5 22,000 - 22,000*30% $ 15,400 6 22,000 - 22,000*30% $ 15,400 7 22,000 - 22,000*30% $ 15,400 8 22,000 - 22,000*30% $ 15,400 9 22,000 - 22,000*30% $ 15,400 10 22,000 - 22,000*30% $ 15,400 11 22,000 - 22,000*30% $ 15,400 12 22,000 - 22,000*30% $ 15,400 13 22,000 - 22,000*30% $ 15,400 14 22,000 - 22,000*30% $ 15,400 15 5 $ 8,000 1 $ 8,000 2 $ 8,000 3 $ 8,000 4 $ 8,000 5 $ 8,000 6 $ 8,000 7 6 $ 5,500 1 $ 5,500 4 $ 5,500 7 7 10,000 - 10,000*30% $ 7,000 0 8 4,600 - 4,600*30% + (7,200 - 4,600)*30% $ 4,000 0Related Questions
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