What is incremental tax rate associated with the purchase

Reference no: EM13199691

A small manufacturing company has an estimated annual taxable income of $95,000. Due to an increase in business, the company is considering purchasing a new machine that will generate additional before-tax annual revenue of $50,000 over the next 5 years. The machine requires an investment of $100,000, which will be depreciated under 5-yr MACRS method.

a. What is the increment in income tax caused by the purchase of the new machine in tax year one?

b. What is the incremental tax rate associated with the purchase of new equipment in year one?

Reference no: EM13199691

Questions Cloud

State certain species of plant are normally distributed : The heights of a certain species of plant are normally distributed, with mean 23 cm and standard deviation 1 cm. What is the probability tha a plant chosen at random

Find what is the present worth of the project : An asset in the 5-yr. MACRS property class cost $100,000 and has no salvage value after six years of use. The asset will generate $300,000 in annual revenues and will require $100,000 in annual labor costs and $50,000 in annual materials costs.

State rounds final grades to the nearest integer : What is the highest grade Tom can get if there is only one more 100 point test and all the tests are equally weighted. the teacher rounds final grades to the nearest integer.

Is management deals with two sometimes competing goals : Argue that the main goal of a firm in a market economy is to maximize profit shareholder wealth over the long term. How might this impact stock price in the short term.

What is incremental tax rate associated with the purchase : A small manufacturing company has an estimated annual taxable income of $95,000. Due to an increase in business, the company is considering purchasing a new machine that will generate additional before-tax annual revenue of $50,000 over the next 5..

Describe what would happen to break-even point : a. If these products are sold in the ratio of 4A for 3B, what is the break-even point b. If the product mix has changed to 5A for 5B, what would happen to break-even point c. In order to maximize the profit, which product mix should be pushed

In what way the company realize a profit : If a company manufactures records and its cost equation for a week is C = 300 + 1.5x and its revenue equation is R = 2x, where x is the number of records sold in a week, how many records must be sold for the company to realize a profit?

How does a firm then maximize the total revenue : Describe the relationship of the demand curve and total revenue curve, indicating which of the four types of market structures market power like this would occur (i.e., perfect competition, monopolistic competition, oligopoly, monopoly).

What would the benefits of each action be : As a policy maker concerned with correcting the effects of gases and particulates emitted by and local power plant, answer the following questions: What two policies could you use to reduce the total amount of emissions Why do you think they each w..

User Account

All Pages