please show steps the awnser is known 11.19 An income-producing asset costs $60
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please show steps the awnser is known
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 11.19, compute the after-tax ROR when sum-of-years'-digits depreciation is charged. Ans. 9.7%Explanation / Answer
Annual depreciation = $60,000 / 7 = $8,571
Year
11.19)Annual depreciation = $60,000 / 7 = $8,571
(a) Before Tax ROR (Excludes depreciation) Before-Tax ROR Year Initial Cost ($) Annual Benefit ($) Net Annual Benefit ($) (A) (B) (A) + (B) 0 $ (60,000.00) $ (60,000.00) 1 $ 15,000.00 $ 15,000.00 2 $ 15,000.00 $ 15,000.00 3 $ 15,000.00 $ 15,000.00 4 $ 15,000.00 $ 15,000.00 5 $ 15,000.00 $ 15,000.00 6 $ 15,000.00 $ 15,000.00 7 $ 15,000.00 $ 15,000.00 ROR (%) = 16.30%Related Questions
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