LiChengs Enterprises just purchased some fixed assets that are classified as 3

Lichengs enterprises just purchased some fixed assets

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58. LiCheng's Enterprises just purchased some fixed assets that are classified as 3-year property for MACRS. The assets cost $1,900. What is the amount of the depreciation expense for year 2? A. $562.93 B. $633.27 C. $719.67 D.$844.36 E. $1,477.63 Depreciation for year 2 = $1,900 .4444 = $844.36 Difficulty level: Medium Topic: MACRS DEPRECIATION Type: PROBLEMS
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Chapter 06 - Making Capital Investment Decisions 6-27 59. RP&A, Inc. purchased some fixed assets four years ago at a cost of $19,800. It no longer needs these assets so is going to sell them today at a price of $3,500. The assets are classified as 5-year property for MACRS. What is the current book value of these assets? Difficulty level: Medium Topic: MACRS DEPRECIATION Type: PROBLEMS
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Chapter 06 - Making Capital Investment Decisions 6-28 60. You own some equipment which you purchased three years ago at a cost of $135,000. The equipment is 5-year property for MACRS. You are considering selling the equipment today for $82,500. Which one of the following statements is correct if your tax rate is 34%? Difficulty level: Medium Topic: SALVAGE VALUE Type: PROBLEMS
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Chapter 06 - Making Capital Investment Decisions 6-29 61. Ronnie's Custom Cars purchased some fixed assets two years ago for $39,000. The assets are classified as 5-year property for MACRS. Ronnie is considering selling these assets now so he can buy some newer fixed assets which utilize the latest in technology. Ronnie has been offered $19,000 for his old assets. What is the net cash flow from the salvage value if the tax rate is 34%? Difficulty level: Medium Topic: SALVAGE VALUE Type: PROBLEMS
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Chapter 06 - Making Capital Investment Decisions 6-30 62. Winslow, Inc. is considering the purchase of a $225,000 piece of equipment. The equipment is classified as 5-year MACRS property. The company expects to sell the equipment after four years at a price of $50,000. What is the after-tax cash flow from this sale if the tax rate is 35%? A. $37,036 B. $38,880 C.$46,108 D. $47,770 E. $53,892 Book value at the end of year 4 = $225,000 (1 - .2 - .32 - .192 - .1152) = $38,880 Tax on sale = ($50,000 - $38,880) .35 = $3,892 After-tax cash flow = $50,000 - $3,892 = $46,108 Difficulty level: Medium Topic: SALVAGE VALUE Type: PROBLEMS
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Chapter 06 - Making Capital Investment Decisions 6-31
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