Jason moves ahead with the investment in Problem 5.14, but the business turns out to be much
Question:
Jason moves ahead with the investment in Problem 5.14, but the business turns out to be much better than expected and a competitor wants to buy Jason's system for \($50,000\) two years after he started. How would you handle the depreciation of the system? Create at least 2 depreciation scenarios and determine the depreciation loss or recaptured depreciation that would need to be recorded if the system were sold.
Data from problem 5.14
Jason anticipates investing about \($75,000\) in a high-end 3-D laser cutter that he estimates will generate \($20,000\) annually for the next decade. Expenses are reasonable and projected to be about \($6,500\) per year. Assuming straight-line depreciation, no salvage value, and combined taxes of 40%, what is the rate of return for this project?
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