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Homework Chapter.8

# Homework Chapter.8 - Homework Chapter 8 Chpt 8 4,5,9,16,18...

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Unformatted text preview: Homework Chapter 8 Chpt 8: 4,5,9,16,18 8.4 It is true that a company can get greater cash flow when the depreciation tax shields are high. The high depreciation tax shields leads to lover taxes. 8.5 Land is not depreciated because it does not fall in value. Any asset that does not lose value over time should not be depreciated. There aren't many assets like that. 8.9 a) Straight line = (700007000)/8= 7875 b) DDB depreciation in year 1 = 70000*2/8 = 17500 Book Value = 7000017500 = 52500 DDB Depr in year 2 = 52500*2/8 = 13125 Book Value = 5250013125 = 39375 DDB Depr in year 3 = 39375*2/8 = 9844 c) 150% depreciation in year 1 = 70000*1.5/8 = 13125 Book Value = 7000017500 = 56875 DDB Depr in year 2 = 56875*1.5/8 = 10664 Book Value = 5687510664 = 46211 DDB Depr in year 3 = 46211*1.5/8 = 8665 6.16 Cash Acct Payable 1200 19300 2200 Assets 19300 1200 2200 9.18 a) Cash Cost of assets sold Assets Sold 14000 12000 14000 Net Assets 12000 b) Book value = B 5(depr) = 12000 depr = (Bs)/n = (B1000)/10 12000 = B5(B1000)/10) 12000 = B.5*B+500 11500 = .5B 23000 = B ...
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