Gator Bicycles just bought a new brake calibration machine that is expected to generate $36,000 in new revenues each of the next four years without increasing cash operating costs. The machine will be depreciated according to the MACRS 3- year class of assets, and its depreciable basis is $144,000. If Gator's marginal tax rate is 35 percent, what are the annual supplemental operating cash flows attributed to the machine? Round your answers to the nearest dollar. show the Excel formulas and step-by-step process Year Supplemental operating CF 1 2 3 4 $ $ $ $
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- Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be 800,000 per year. The system costs 4,000,000 and will last eight years. Compute the NPV assuming a discount rate of 10 percent. Should the company buy the new system? 2. Sterling Wetzel has just invested 270,000 in a restaurant specializing in German food. He expects to receive 43,470 per year for the next eight years. His cost of capital is 5.5 percent. Compute the internal rate of return. Did Sterling make a good decision?Degemes Corporation is considering investing $33,000 in a new machine . The machine is expected to last five years and to have a residual value of \$8.000 Annual tax net cash inflow from the machine is expected to be $ 7,000 . Degernes Corporation's income tax rate is 40% Calculate the accounting rate of return (Round your answer to the nearest tenth of a percent ) (Note : The accounting rate of return is called the unadjusted rate of return in your textbook ) 9.8% 20.5% 5.9 % None of the listed choices are correct 9.6%Gator Bicycles just bought a new brake calibration machine that is expected to generate 124,000 in new revenues each of the next four years without increasing cash operating costs. The machine will be depreciated according to the MACRS 3-year dass of assets, and its depreciable bass is 196,000. af Gator's marginal tax rate is 35 percent, what are the annual supplemental operating cash flows attributed to the machine? Round your answers to the nearest dolla Year Supplemental operating CF 1 2 X $ E 1 $
- ABC is starting a new project. It will require new equipment costing 34. The project is expected to increase gross profits by 26 per year, starting at the end of the first year, with associated costs of 13 for each of those years. The machine is expected to have a working life of 7 years and will be depreciated over those 7 years. The marginal tax rate is 0.3. What are the incremental free cash flows associated with the new machine in year 2?our firm, Agrico Products, is considering a tractor that would have a cost of $37,000, would increase pretax operating cash flows before taking account of depreciation by $12,000 per year, and would be depreciated on a straight-line basis to zero over 5 years at the rate of $7,400 per year beginning the first year. (Thus, annual cash flows would be $12,000 before taxes plus the tax savings that result from $7,400 of depreciation.) The managers disagree about whether the tractor would last 5 years. The controller insists that she knows of tractors that have lasted only 4 years. The treasurer agrees with the controller, but he argues that most tractors do give 5 years of service. The service manager then states that some last for as long as 8 years. Assume that if the tractor only lasts 4 years, then the firm would receive a tax credit in Year 4 because the tractor's salvage value at that time is less than its book value. Under this scenario, the firm would not take depreciation expense…Techno Lab, a taxpaying entity, estimates that it can save $30,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye-testing machine at a cost of $135,000. No terminal disposal value is expected. Techno Labs' required rate of return is 10%. Assume all cash flows occur at year-end except for initial investment amounts. Techno Labs uses straight-line depreciation. The income tax rate is 34% for all transactions that affect income taxes. . Requirement 1. Calculate the following for the special-purpose eye-testing machine: Net present value (NPR) (Round interim calculations and your final answers to the nearest whole dollar. Use a minus sign or parentheses for a negative net present value.) 1. Calculate the following for the special-purpose eye-testing machine: a. Net present value b. Payback period c. Internal rate of return d. Accrual accounting rate of return based on net initial…
- Your firm, Agrico Products, is considering a tractor that would have a cost of $36,000, would increase pretax operating cash flows before taking account of depreciation by $12,000 per year, and would be depreciated on a straight-line basis to zero over 5 years at the rate of $7,200 per year, beginning the first year. (Thus, annual cash flows would be $12,000 before taxes plus the tax savings that result from $7,200 of depreciation.) The managers are having a heated debate about whether the tractor would actually last 5 years. The controller insists that she knows of tractors that have lasted only 4 years. The treasurer agrees with the controller, but he argues that most tractors actually do give 5 years of service. The service manager then states that some last for as long as 8 years. Assume that if the tractor only lasts 4 years, then the firm would receive a tax credit in Year 4 because the tractor's salvage value at that time is less than its book value. Under this scenario, the…Daily Enterprises is purchasing a $10.4 million machine. It will cost $47,000 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value. The machine will generate incremental revenues of $4.2 million per year along with incremental costs of $1.4 million per year. If Daily's marginal tax rate is 21%, what are the incremental earnings (net income) associated with the new machine? The annual incremental earnings are $ (Round to the nearest dollar.)Kelly, Inc. management is considering purchasing a new machine at a cost of $4,133,250. They expect this equipment to produce cash flows of $814,322, $863,275, $937,250, $1,017,112, $1,212,960, and $1,225,000 over the next six years. If the appropriate discount rate is 15 percent, compute the NPV of this investment and explain how the tax imposition would affect your NPV.
- Outback is purchasing a new machine that will cost $98,000. The machine will qualify as MACRS 5-year property but has an economic life of 8 years. The new machine is expected to increase revenues by $35,000 per year, and operating costs are expected to increase by $15,000 per year. If the firm's marginal tax rate is 34 percent and the first year's depreciation rate is 20 percent, what is the net cash flow in the first year. a. $7,984 b. $26,034 c. $19,864 d. $264Daily Enterprises is purchasing a $9.7 million machine. It will cost $54,000 to transport and install the machine. The machine has a depreciable life of 55 years and will have no salvage value. The machine will generate incremental revenues of $4.2 million per year along with incremental costs of $1.1 million per year. If Daily's marginal tax rate is 20%, what are the incremental earnings (net income) associated with the new machine?Daily Enterprises is purchasing a $10.5million machine. It will cost $46,000 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value. The machine will generate incremental revenues of $4.3 million per year along with incremental costs of $1.5 million per year. If Daily's marginal tax rate is 21%, what are the incremental earnings (net income) associated with the new machine? The annual incremental earnings are $_____________________(Round to the nearest dollar.)