Marginal tax bracket, Taxation

Assignment Help:

Maskot Industries wishes to determine whether it would be advisable to replace an existing, fully depreciated machine with a new piece of equipment.
The new machine will cost $300,000. It will be depreciated (straight line) over a four-year period, assuming a salvage value of $25,000.
The old machine could be sold today at $80,000.

The firm is in the 33.00% marginal tax bracket and requires a minimum return on the replacement decision of 8.00%.

The firm's estimates of its revenues and expenses (excluding depreciation) for both the new and old machines, over the next four years, are given in the provided workbook. Mascot also estimated the values of various current accounts that would be impacted by the proposed replacement. They are also shown, in the provided workbook, for both the new and old machines over the next four years. Currently, the firm's net investment in these current accounts is assumed to be $80,000.

Mascot estimates that after four years of operations, the machine will be sold for $50,000. Also assume that remaining net working capital, at the end of year four, will be rolled over to the next project.

Follow the steps below to complete the provided template.
You will also be asked to load your spreadsheet at the end of this assignment.

A. Under "Section A. Provided Data", add the missing value drivers. Calculate the necessary incremental cash flows.

B.Under "Section B. DCF Model", following the given time line, calculate the annual FCFs and the project's net present value and internal rate of return.

Write a short interpretation of the results.

C. Pick two independent variables of your choice and replace those variables with combo boxes. Each combo box should offer at least 5 different choices. Make sure that all the choices maintain the model integrity.

D. Under "Section D. Analysis", explain how sensitive Mascot's project is to the two chosen independent variables.


Related Discussions:- Marginal tax bracket

Explain expatriation tax, An expatriation tax is a tax on somebody who give...

An expatriation tax is a tax on somebody who gives up their citizenship. In United States, the expatriation tax provisions under Section 877 and Section 877A of the Internal Revenu

Federal tax brackets, Income tax groupings given by the Internal Revenue Se...

Income tax groupings given by the Internal Revenue Service (IRS) that decide that at what rate an individual, corporation's or trust, annual income will expose to federal income ta

DEPRECIATION, In April 2016, Reiko purchased and placed a rental house in s...

In April 2016, Reiko purchased and placed a rental house in service. She paid $184,000, including $27,000 for the land. Compute her 2016 depreciation on the rental.

Explain the incidence of this tax, Question 1: Government imposes a spe...

Question 1: Government imposes a specific tax on hotel room.  Use demand and supply analysis to explain the incidence of this tax on the tourist, hotelier, Government as well a

Consolidated tax returns, Avis''s taxable income for the year is $300,000 a...

Avis''s taxable income for the year is $300,000 and Best''s taxable income for the year is $425,000. For each of the scenarios provided,

Assignment , I have the whole case and this is the question (Canadian Taxa...

I have the whole case and this is the question (Canadian Taxation) Compute Net Income, Taxable Income and Net Federal Tax Payable for 2012 for Sandra, Steven, Annabelle and Ronnie

Tds , tds late filing fee code & late filing interest code

tds late filing fee code & late filing interest code

Calculate fiduciary income, should be on 2012 forms and done in pencil. It ...

should be on 2012 forms and done in pencil. It should include a schedule that shows the fiduciary income calculation and other relevant calculations. Jack Green established the Jac

Statements on Standards for Tax Services, 28) Explain how Treasury Departme...

28) Explain how Treasury Department Circular 230 differs from the AICPA’s Statements on Standards for Tax Services.

Calculation of tax benefits of capital allowances, Calculation of tax benef...

Calculation of tax benefits of capital allowances The net present value is approximately $1083000 An alternative solution using annuity factors is as follows. T

Write Your Message!

Captcha
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