What is the machines net cash flow for year five

Assignment Help Financial Management
Reference no: EM132023248

Tank Ltd is considering undertaking the purchase of a new piece of equipment that is expected to increase pre-tax income(EBITDA) by $7,000 each year for the next 5 years.

It costs $25,000 to purchase today and for tax purposes must be depreciated down zero over its 8 year useful life using the straight-line method.

If Tank is actually forecasting a salvage (for capital budgeting purposes) of $8,000 after 5 years, what is the machine's net cash flow (after tax) for year 5? Assume the tax rate is 30%.

NB: EBITDA is "Earnings Before Interest, Taxes, Depreciation and Amortisation"

Reference no: EM132023248

Questions Cloud

What is the firms total tax liability for the year : Find the tax and the after-tax amount attributable to the dividend income from the Tank Industries, Inc., common stock.
How they affected imperialist agendas : Elaborate on the meanings of mass media in either pre-colonial or colonial periods and explain how they affected imperialist agendas
Increases the rate of appropriate behavior : Attention to appropriate behavior increases the rate of appropriate behavior. What are the implications of this statement for classroom teachers, parents
How would you characterize the grandmother : In the story "A good man is hard to find" How would you characterize the grandmother?
What is the machines net cash flow for year five : It costs $25,000 to purchase today and for tax purposes must be depreciated down zero over its 8 year useful life using the straight-line method.
One of the issues explored in this greed : In the story "the necklace " One of the issues explored in this greed. What, specifically, do you think is being said about greed?
Which source of borrowing is less costly for bella : Is there any other consideration that Bella ought to think about when deciding which loan to take out to pay for the motorcycle?
Reasons for utilizing professional networking : Can you help me determine three reasons for utilizing professional networking during the job-hunting process? Why would this be beneficial?
What is holmess after-tax cost of debt : After-tax Cost of Debt The Holmes Company's currently outstanding bonds have a 10% coupon and a 13% yield to maturity.

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