Determine if the company obtained the expected after-tax

Assignment Help Financial Management
Reference no: EM131959728

JET FAB bought a CNC laser cutting machine at a cost of $750,000 to meet the specific needs of customer that had given a 4-year contract with the possibility of extending the contract for another 4 years.

The company uses the MACRS depreciation method for this equipment as a 7-year property for tax purposes.

The income tax rate for the company is 42%, and the company expects to have an after -tax rate of return of 8% in all its investments.

The laser cutting machine generated an annual income of $250,000 for the first four years. The customer decided not to renew the contract after 4 years due to circumstances beyond its control. Consequently, the company ended up selling the CNC laser cutting machine for $220,000.

Determine if the company obtained the expected after-tax rate of return on this equipment.

Reference no: EM131959728

Questions Cloud

What is the structure of acos and pcmhs organizations : ACOs and PCMHs are two new organizations formed under PPACA. What is the structure of ACOs and PCMHS organizations?
Increase the future value of lump sum investment : Which of the following will increase the future value of a lump sum investment made today that all interest is reinvested?
Discuss how materials science has advanced to the stage : Discuss how materials science has advanced to the stage where materials can be engineered to fit a specific purpose.
Define how performance should be measured : For many jobs it is difficult to define how performance should be measured. How would you decide what should be measured?
Determine if the company obtained the expected after-tax : Determine if the company obtained the expected after-tax rate of return on this equipment.
What was their inventory turnover ratio : How much depreciation accumulated from 2014 to 2015? What was their inventory turnover ratio for 2015?
Explain how evidence-based research influences health care : Explain how evidence-based research influences the health care industry. Compare external influences on health care research.
What is a balanced transportation problem : What is a balanced transportation problem? Describe the approach you would use to solve an unbalanced problem.
Calculate the return of value-weighted index : Calculate the return of a value-weighted index consisting of these three stocks during this period.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd