3232ex11-2 - 3232ex11-2 Info: Machine purchased 2 yrs ago:...

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Unformatted text preview: 3232ex11-2 Info: Machine purchased 2 yrs ago: $20,000 5 yr life, S=$5000 (original estimate) O&M are now $8000/yr Salvage will be $2000 in 3 yrs Current mkt value = $10,000 CCA 20% Marginal Tax Rate: 40% MARR: 12% Find: Net market value of machine if disposed today: Should the machine be replaced given a $15K challenger with 3 yr life, S=5500, O&M savings $2K Net Market Value: UCC(2) = 20000(1-.1)(1-.2) = 14,400 Current Mkt Value: 10,000 Prospective Salvage Loss: 4,400 Disposal Tax Effect 1,760 Net Market Value: 11,760 Defender: Cash flow perspective Financial Info Year-2-1 1 2 3 CCA (20%) 2,000.00 3,600.00 2,880.00 2,304.00 1,843.20 UCC 20,000.00 18,000.00 14,400.00 11,520.00 9,216.00 7,372.80 Salvage 2,000.00 Sale loss 5,372.80 Disp Tx 2,149.12 O&M Costs 8,000.00 8,000.00 8,000.00 Income Statement Revenue 0.00 0.00 0.00 Expense O&M 8,000.00 8,000.00 8,000.00 CCA 2,880.00 2,304.00 1,843.20 Taxable Income-10,880.00 -10,304.00-9,843.20 Income Tax-4,352.00-4,121.60-3,937.28 Net Income-6,528.00-6,528....
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3232ex11-2 - 3232ex11-2 Info: Machine purchased 2 yrs ago:...

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