Determine the annual marginal tax rates for the next 3 years

Reference no: EM13241338

1. Joe started a business in 2001 renting hot tubs for parties. He bought three tubs at that time for $1,200 each. In 2003, he had rental income of $12,390 and operating expenses of $4250. The hot tubs fall into the MACRS 7-year class. What is Joe's after-tax cash flow for 2003 (Year 2)?

Hint: To compute after-tax cash flow for Year 2, you must calculate the income taxes and subtract that amount from the total taxable income in Year 2.

2. A contractor expects to have an annual taxable income of $400,000 from its regular business for the next 3 years. The contractor is considering buying a new piece of equipment that costs $115,000. The equipment falls into the MACRS seven year class and will have an estimated salvage value of $25,000 at the end of five years. The equipment is expected to generate additional before-tax revenue
of $90,000 per year.

a) Determine the annual marginal tax rates for the next 3 years with the new equipment.

b) Determine the annual income taxes to be paid for the next 3 years with the new equipment.

Reference no: EM13241338

Questions Cloud

How much was that measured in the value of the us dollar : You will need to find the CPI for JULY 2011. You will need to find the "Annual Average CPI" for the year you were born. Make sure that you identify your birth year, your birth year CPI, and the JULY 2011 CPI.

What molarity of sulfide ion will produce the greatest lead : What molarity of sulfide ion will produce the greatest amount of lead sulfide (Ksp = 8.0 x 10-28) precipitate without precipitating any tin(II) sulfide(Ksp = 1.0 x 10-25)

Determine net income for the period of common stock : Determine net income for the period if beginning stockholders' equity is $19,000, dividends declared amount to $7,000, ending stockholders' equity is $37,000 and the corporation issued $1,000 of common stock.

The eastern end to seattle : Interstate 90 is the longest of the ease-west U.S. interstate highways with its 3,112 miles stretching from Boston, MA at I-93 on the eastern end to Seattle

Determine the annual marginal tax rates for the next 3 years : A contractor expects to have an annual taxable income of $400,000 from its regular business for the next 3 years. The contractor is considering buying a new piece of equipment that costs $115,000. The equipment falls into the MACRS seven year

What is the mass spectrum of an organic compound : The mass spectrum of an organic compound shows the relative abundance of M to be 34.29% and M+1 to be 8.901%. Assuming the peaks are caused by 12C and 13C isotopes, determine the number of carbon atoms in the compound. Natural abundance: 12C is 98..

The standard normal distribution variable : How does Z the standard normal distribution variable relate to the standard deviation of its distribution and identify the critical value suitable for conducting a two-tail test of the hypothesis at the 2% level.

What can be done to boost the profits : You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales ($125 million last year) and a low marginal cost of producing the product ($0.25 per pill)

National basketball association calculates many statistics : The national basketball association calculates many statistics, as do other professional sports organizations.

User Account

All Pages