What is present value of cca tax shield for new equipment

Assignment Help Financial Accounting
Reference no: EM132761247

Angelo is considering the purchase of a new equipment to replace an old one. Both items have a 25% CCA rate. The new equipment costs $13,300 and have a useful life of four years, at which time it will have a salvage of zero. The old equipment can be sold now for $630 and could be scrapped for $380 in four years. The operating revenues will increase annually by $9,300 with the new equipment. The tax rate is 22% and the required rate of return is 15%.

Problem 1: What is the present value of CCA tax shield for the new equipment?

Problem 2: What is the present value of incremental operating cashflow for the new equipment?

Problem 3: What is the NPV of the replacement decision? Should Angelo replace the old equipment with the new one?

Reference no: EM132761247

Questions Cloud

What amount should the inventory be valued : On January 2, 2019, Silent Corporation has an investment property that was carried at fair value with a carrying amount of Php 2,500,000.
Why are bonds used to raise money : Why are bonds used to raise money? Name and describe the characteristics of bonds. What is a bond discount? What is a bond premium
Describes changes would make to ikea sustainability : Write the IKEA executive of your choice a brief executive memo that describes changes you would make to IKEA's sustainability practices.
What are advantages and drawbacks for organizations : What are the advantages and drawbacks for organizations using social media to communicate with various employees, customers, or the global communities?
What is present value of cca tax shield for new equipment : Angelo is considering the purchase of a new equipment to replace, What is the present value of CCA tax shield for the new equipment?
What was the net income of the PAC Partnership : Ute's capital account had a net increase of $550,000 during 20X8. What was the net income of the PAC 12 Partnership for 20X8
Research maslow hierarchy-human motivation : Explain the similarities of how each theory explains or addresses Human Motivation.
Where and how do gaba neurotransmitter function : How does an epilepsy affect the function of GABA? Describe the impact it has on the nervous system and other body functions.
What amount of accounts receivable would the company report : Assume a company is preparing a budget, What amount of accounts receivable would the company report in its balance sheet at the end of the second month?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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