( full taxation problem) Compare th followed two alternatives using MACRS deprec
ID: 2647482 • Letter: #
Question
( full taxation problem)Compare th followed two alternatives using MACRS depreciation and present worth AFTER taxes. MARR= i = 6% ITR = 40% A company eishes to decide between two approach s to providing transportation in a city which has sea port facilities and good highways. Alternative A requires buying 4 GENRALVPURPOS TRUCKS at a cost of $25,000 each. Alternative B requires buying a small ocen going tug ( TUG BOAT) at a costcof $200,000. Both the trucks and the tug will be kept for longer thanvthe period we are considering. The betore tax revenue flow for the tug $80,000 per year. Analyz the alternatives for period of n = 8 years ( full taxation problem)
Compare th followed two alternatives using MACRS depreciation and present worth AFTER taxes. MARR= i = 6% ITR = 40% A company eishes to decide between two approach s to providing transportation in a city which has sea port facilities and good highways. Alternative A requires buying 4 GENRALVPURPOS TRUCKS at a cost of $25,000 each. Alternative B requires buying a small ocen going tug ( TUG BOAT) at a costcof $200,000. Both the trucks and the tug will be kept for longer thanvthe period we are considering. The betore tax revenue flow for the tug $80,000 per year. Analyz the alternatives for period of n = 8 years
Compare th followed two alternatives using MACRS depreciation and present worth AFTER taxes. MARR= i = 6% ITR = 40% A company eishes to decide between two approach s to providing transportation in a city which has sea port facilities and good highways. Alternative A requires buying 4 GENRALVPURPOS TRUCKS at a cost of $25,000 each. Alternative B requires buying a small ocen going tug ( TUG BOAT) at a costcof $200,000. Both the trucks and the tug will be kept for longer thanvthe period we are considering. The betore tax revenue flow for the tug $80,000 per year. Analyz the alternatives for period of n = 8 years
Explanation / Answer
Tug with higher NPV is a better choice.
Year Particulars Trucks MACR@7 years Tax benefit@40% Total Bebefit PV@6% Tug MACR@7years Tax benefit@40% Total Benefit PV@6% 0 Investment 100000 -100000 200000 -200000 1 Return 30000 14290 5716 35716 33694.34 80000 28580 11432 91432 86256.6 2 Return 30000 24490 9796 39796 35418.3 80000 48980 19592 99592 88636.53 3 Return 30000 17490 6996 36996 31062.55 80000 34980 13992 93992 78917.5 4 Return 30000 12490 4996 34996 27720.11 80000 24980 9992 89992 71282.09 5 Return 30000 8930 3572 33572 25086.95 80000 17860 7144 87144 65119.07 6 Return 30000 8920 3568 33568 23664.12 80000 17840 7136 87136 61427.44 7 Return 30000 8930 3572 33572 22327.3 80000 17860 7144 87144 57955.74 8 Return 30000 4460 1784 31784 19941.67 80000 8920 3568 83568 52431.6 Total 118915.3 362026.6Related Questions
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