Graded Homework 2

Graded Homework 2 - Graded Homework 2 This assignment is...

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Graded Homework 2 This assignment is due at the beginning of class on Monday February 14 th . The assignment is to be completed individually. You may consult with classmates to discuss the problems, but each individual student must turn in a solution showing all work. The assignment is worth 15 points. Problem 1 Evergreen Corporation, a calendar year, accrual basis taxpayer, requires a new piece of equipment for use in its manufacturing business. The company would like to determine whether it would be cost beneficial to invest in the equipment and has asked you to determine the present value of the after-tax cost of purchasing the equipment. The equipment will cost $75,000 and qualifies as a 5 year asset under the MACRS classification. Evergreen would use the equipment for 5 years. At the end of the five years, Evergreen estimates that it could sell the equipment for $15,000. Assume that bonus depreciation and the Sec. 179 expensing option are not available. Calculate the present value of after-tax cash flows that would result if Evergreen purchases the
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Graded Homework 2 - Graded Homework 2 This assignment is...

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