MACRS Table accounting help. Please make sure every field is correct, I will com
ID: 2420882 • Letter: M
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MACRS Table accounting help. Please make sure every field is correct, I will comment if it's not and I will rate thumbs up if it's correct. Thank you.
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A proposed cost-saving device has an installed cost of $650,000. The device will be used in a five-year project but is classified as three-year MACRS (MACRS Table) property for tax purposes. The required initial net working capital investment is $46,500, the marginal tax rate is 30 percent, and the project discount rate is 15 percent. The device has an estimated Year 5 salvage value of $71,500. What is the depreciation each year of the project What is the aftertax salvage value of the equipment What level of pretax cost savings do we require for this project to be profitable CSM Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $493,000 is estimated to result in $192,000 in annual pretax cost savings. The press falls in the MACRS five-year class (MACRS Table) and it will have a salvage value at the end of the project of $59,000. The press also requires an initial investment in spare parts inventory of $21,800, along with an additional $3,800 in inventory for each succeeding year of the project. The shop's tax rate is 34 percent and its discount rate is 12 percent. Calculate the depreciation for each year of the project. Calculate the aftertax salvage value for the equipment at the end of the project. Calculate the operating cash flow for each year of the project. Calculate the NPV Should the company buy and install the machine pressExplanation / Answer
1.
Steps in Calculation
Calculating depreciation under MACRS involves the following steps:
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