What will be the effect on reported earnings

Assignment Help Financial Management
Reference no: EM131328587

The government is considering a proposal to allow even greater accelerated depreciation deductions than those specified by MACRS.

a. For which type of company would this change be more valuable, a company facing a 10 percent tax rate or one facing a 30 percent tax rate?

b. If companies take larger depreciation deductions in the early years of an investment, what will be the effect on reported earnings? On cash flows? On project NPVs? How do you think the stock market might respond if the tax law changes to allow greater accelerated depreciation?

Reference no: EM131328587

Questions Cloud

What is the only relevant decision for independent projects : What is the only relevant decision for independent projects if an unlimited capital budget exists? How does your response change if the projects are mutually exclusive?
What are the advantages of managing database : In addition, what are the advantages of managing database information in Access versus using a worksheet in Excel
What is the present value of the depreciation tax savings : By how much would that number change if the firm could treat the $2-million installation cost as a deductible expense rather than include it as part of the depreciable cost of the asset?
Describe the social mobility of each stratification system : Complete a comparative analysis of stratification systems.Choose at least three stratification systems. One must be the class system.Describe the social mobility of each stratification system.Explain how individuals are sorted within the systems.
What will be the effect on reported earnings : For which type of company would this change be more valuable, a company facing a 10 percent tax rate or one facing a 30 percent tax rate?
Is it more important to compare the ratios to competitors : When analyzing a company, is it more important to compare the ratios to competitors or to the company's previous history? Provide a rationale for your response.
What role will states play in implementing the policy : Discuss the power and discretion states have in making decisions for federally funded health programs. Using the PPACA as an example, what role will states play in implementing the policy
What additional earning after taxe will result from overhaul : What additional earnings, before depreciation and taxes, will result from the overhaul?- What additional earnings after taxes will result from the overhaul?
How are accounting policies defined in the literature : Identify the literature that addresses the disclosure of accounting policies. How are accounting policies defined in the literature? What are the guidelines concerning consistency in applying accounting policies?

Reviews

Write a Review

Financial Management Questions & Answers

  Coupon interest rate if a bond is trading at premium

Yield to maturity is higher than the coupon interest rate if a bond is trading at Premium. There exists a negative relationship between outstanding bond prices and going market interest rates.

  Newly acquired knowledge of time value of money

Give an example of how your newly acquired knowledge of Time Value of Money (TVM) calculations could better prepare you for the next negotiation or big-ticket purchase in your life.

  What is primroses cash conversion cycle

Primrose Corp has $17 million of sales, $3 million of inventories, $4 million of receivables, and $1 million of payables. Its cost of goods sold is 65% of sales, and it finances working capital with bank loans at an 9% rate. What is Primrose's cash c..

  What would you expect to happen to the value of the swap

As the default correlation between the reference entities increases what would you expect to happen to the value of the swap when (a) n = 1 and (b) n = 25.

  Accounting method applied to mortgage-backed securities

Explain how the accounting method applied to mortgage-backed securities made it more difficult for banks to satisfy capital requirements during the credit crisis

  Financial markets are perfectly efficient

Randal Flapjack is a retired short-order cook living on a fixed income in the state of Utopia where all financial markets are perfectly efficient. What is Sugarcooky's current price? What will be the value of his remaining shares at the end of a year..

  Now suppose you hold a portfolio consisting of 250000 worth

suppose you owned a portfolio consisting of 250000 worth of long-term u.s. government bonds.a. would your portfolio be

  Find an article or application of type of installment loan

Critique the use of bank debit cards. Bank debit cards are becoming a popular alternative to using checks or credit cards. Investigate the advantages and disadvantages of using a bank debit card and answer the questions below. An installment loan is ..

  Nominal annual cost of nonfree trade credit

Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume payment is made either on the due date or on the discount date. Assume 365 days in year for your calculations. Do not round intermediate calculations.

  Time value of money-stock and bond valuation

Two Guidelines and Rubric Overview: For the final project, you will use this case study to prepare a financial analysis report for Home Depot Inc. You will include in your analysis the background calculations and managerial analysis for each of the f..

  How much money has been reinvested in the firm

How much money has been reinvested in the firm over the years? -At the present time, how large a check could be written without it bouncing?

  Adjusting returns for exchange rates

Adjusting returns for exchange rates (LO21-2) An investor in the United States bought a one-year Brazilian security valued at 195,000 Brazilian reals. The U.S. dollar equivalent was 100,000. Determine the total ending value of the Brazilian investmen..

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