Do not use any spread sheets you can solve any problem youd like. i rate all the

Question

Do not use any spread sheets you can solve any problem youd like. i rate all the time please show work

CHAP. 11] DEPRECIATION AND TAXES 125 A car rental agency has bought three economy-size, four medium-size, and two full-size cars; see Table 11-25. Using composite depreciation, compute the annual straight-line depreciation charge and the (composite) life for this collection of cars. Ans. $12100. 324/121 = 2.678 years 11.11 Table 11-25 Economy Medium Full Initial Cost (each) Service Life Salvage Value (each) $6200 2 years $3600 $8200 $13 000 3 years 3 years $4900 $7300 11.12 Rework Problem 11.11 using group depreciation. Ans. $12 150, 8/3= 2.667 years Rework Problem 10.16, assuming a 4-year tax life remaining for the current machine and a 4-year tax life for the new one. Straight-line depreciation is used, and an after-tax MARR of 15% is applicable. The tax rate is 50%. Ans. after-tax EUAC1,-$6565, after-tax EUACnew-$7640, keep old machine 11.13 Would the decision made in Problem 10.5 change if the second-hand machine could be depreciated in 10 years by the sum-of-years-digits method and the company's tax rate is 52%? The after-tax MARR is 10%. 11.14 Ans. after-tax EUACshut-down-$168, after-tax EUAC,and-by= $407; decision unchanged. Rework Problem 10.15, using an after-tax MARR of 10% and straight-line depreciation. The company's tax rate is 52% 11.15 Ans. 18 days Would the economic life of the challenger in Problem 10.19 change if the sum-of-years -digits deprecia- tion method is used, the tax life is 8 years, the tax rate is 52%, and the after-tax MARR is 10%? Ans. no [after-tax EUAC(6) $2321] 11.16 11.17 Perform an after-tax analysis for the situation described in Problem 10.20. Assume that the service life and the tax life are identical, that straight-line depreciation is used, that the after-tax MARR is 10%, and that the company's tax rate is 50%. Arts, after-tax CUV> $1000; keep current machine. 11.18 A machine's current book value is $600. The machine cost $1300 three years ago. Operating expenses have been $380 per year, and the machine could last for three more years. Because of a breakthrough in design, a replacement machine which would save $300 per year sells for $1000 and has an expected service life of eight years. The scrap value of either machine at any time after installation is $100. If the IRS allows straight-line depreciation over a six-year period for this type of machinery and if an after-tax MARR of 12% is acceptable, should the current machine be changed? The company's tax rate is 52% Ans. after-tax EUACcurrent $90, after-tax EUACreplacement $167; keep current machine. 11.19 An income-producing asset costs $60 000, has an estimated useful life of 7 years, has no salvage value after installation, and is expected to produce annual net savings of $15 000. The company's tax rate is 52%. Compute (a) the before-tax ROR, and (b) the after-tax ROR under straight-line depreciation Ans, (a) 16.3%; (b) 8.6% 11.20 For the situation described in Problem .19, compute the after-tax ROR when sum-of-years'-digits depreciation is charged. Ans. 9.7% 11.21 Fifty percent of the asset described in Problem 11.19 was financed from capital borrowed at 7%. This loan is to be repaid at the end of the seventh year, but interest is due on the principal at the end of each year. Rework Problem 11.20 Ans. 26.0% (notice the big difference made by tax-deductible interest and the delay of seven years in half of the investment)

Explanation / Answer

11.11

annual depreciation

=(6200*3-3600*3)/2+(8200*4-4900*4)/3+(13000*2-7300*2)/3

=12100

economic life=((6200*3-3600*3)+(8200*4-4900*4)+(13000*2-7300*2))/12100

=2.678 years

the above are answers

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.