Quiz5_Spring09

# Quiz5_Spring09 - rr;1 f-l Q ~ s< L • ~ ~-r-I b" f I...

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CREE 5369 / 6369 Quiz # 5 (Closed book) Tuesday February 24, 2009 1" An asset with ( a first cost of \$45,000 has a life of 5 years, a salvage value of \$3000, and an anticipated CFBT of \$15,000 per - year. Using an effective tax rate of 50% and 10% annual interest rate, determ ~ total taxes, and the present worth o f taxes when depreciation is calculated using the SL method versus using a DDB - SL switch method . 1 . Wh i ch method results in lower total taxes? How much lower? 2. Which method results in lower PW of taxes? How much lower? G ra d ien t Un i f o rm S e r ies A / G 0 . 4 7 6 2 0 . 9 36 6 1 . 381 2 1 . 8 1 0 1 2.2 23 6 2 . 6216 . G f ST: : KI 5 f OO O - J - 1 -- ~ ( T -! - ~) \ ' e - "',, - : > L , - \ 0 ( " - (~ V t - -\ ) \ ) SL - Il- . J \ I b . - \ - S ~ V 1;- \ - 5 > L . o \~ - ( l~ -;. . . - 1 ) 1)1>13 - - -; . . 'A - V\ - - t ; . - t " \ (; , - /: :; ~ L - M e - \ - \ .. 0 0\ ~ ?/ ~ ' P v J 1j ' V b - \ !> s t . . . ' i . , , ~ ~ ' t 5, 0 0 0 2 1 . r oo 1 . . ~, 5 " 00 8 , ' 10 0 1 8, ; , 0 0 o.~ O ~ \ Ib ,b ) k , . S) :SG " b OO '8 .' - { 00 II " i t 1 0 0 0 .. g 'l .. 6 < - \ I I , b 5 7 . . .' L11 ?:< 1 , 1 . 0 0 I .• . . •. _~ - "' . . ---_ . . _ _ -. .• . . . .• . •. .., ~ " " I q / ~ 0 0 ~ '1 oo "I , "too o ~ t s " I J I 1\ L . \ . 0 0 g ' - \ O U S f l -- OO 0 , ~f81 1 . 1 I f i ? I ' -- \ D O '5 00 0 , 10 1 . . 0 ' 1 - - )r 00 0 I ) 1 31.)5' l

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Quiz5_Spring09 - rr;1 f-l Q ~ s< L • ~ ~-r-I b" f I...

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