Purchase Solution

11-45 Present Value of MACRS Depreciation

Not what you're looking for?

Ask Custom Question

11-45 Present Value of MACRS Depreciation
Compute the PV of the MACRS tax savings for each of the following five assets:
Asset Cost Recovery Period Discount Rate Tax Rate
a.. $240,000 3-year 12% 35%
b.. $650,000 5-year 10% 40%
c.. $55,000 7-year 16% 50%
d.. $900,000 10-year 8% 35%
e.. $400,000 10-year 15% 28%.

See the attached file.

Attachments
Purchase this Solution
Solution Summary

Your tutorial shows a schedule for each scenario and the MACRS tables with the depreciation rate for each year. Click in the cells for computations.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Basics of corporate finance

These questions will test you on your knowledge of finance.

View More Free Quizzes
Related BrainMass Solutions

  • Incremental cash flows, depreciation, net present value

    What is the net present value (NPV) of the new oven? The 5-year depreciation rates are: 20% for the first year, 32% for the second year, 19% for the third year, 12% for the fourth year, 11% for the fifth, and 6% for the final year.

  • Depreciation, Investment Appraisal

    Prepare tables listing the annual cost of depreciation and the book value at the end of each 6 years , based on the straight line , sum of years digits and MACRS depreciation. 2.

  • Net present value (NPV) of the proposed project

    109483 Net Present Value using MACRS Depreciation method Company A is considering a major expansion of its business. The details of the proposed expansion project are summarized below: ?

  • Payback methods and depreciation expense

    The net present value (NPV) method offsets the present value of an investment's cash inflows against the present value of the cash outflows.

  • Decision Making: Lease vs. Purchase

    Compute the present value of the after-tax cost of the two alternatives. Use a discount rate of 8 percent. 7. Which alternative should be selected, based on minimizing the present value of after-tax costs?

  • Capital Budgeting- Proposed acquisition of equipment

    10% is positive at $25,889 Calculates the cash flows and net present value of a project.

  • PV of tax savings with MACRS, with Straight line

    The company's required rate of return is 12%. (a) What is the total present value of tax savings if the company uses MACRS depreciation? (b) What is the total present value of tax savings if the company uses straight-line depreciation?

  • Clyne Industries - Net Present Value

    Depreciation will be under MACRS for a 3-year class asset, with depreciation rates of 33 percent, 45 percent, 15 percent, and 7 percent. The salvage value of the equipment at the end of four years is expected to be $50,000.

  • Straight-line or MACRS depreciation

    226127 Cash Flows We've emphasized that the firm should pay attention only to cash flows when assessing the net present value of proposed projects. Depreciation is a non-cash expense.

View More Related Solutions