Question 4: A company purchases an equipment for $500,000 in year 0 and uses it for...

 

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Question 4: A company purchases an equipment for $500,000 in year 0 and uses it for 10 years. Within the first 8 years, it depreciates $450,000 of the equipment and the depreciation allowance for years 9 and 10 are shown in the table below. The table below shows the cash flow of the last two years of the investment with some values missing: Assume the Tax rate to be 20%. BT&LCF - Before Tax and Loan Cash Flow. ΕΟΥ 9 10 BT&LCF PPMT 100,000 45000 150,000 40000 IPMT 5000 10000 A) What is Taxable Income in year 9? (Y1) DWO $15,000 $5,000 TI Y1 Y5 TAX Y2 Y6 C) What is the book value of the equipment at the end of year 10? ATCF Y3 Y7 B) What is the After-tax Cash Flow for year 9? (Y3) [hint: You need to first calculate Y2]. Question 4: A company purchases an equipment for $500,000 in year 0 and uses it for 10 years. Within the first 8 years, it depreciates $450,000 of the equipment and the depreciation allowance for years 9 and 10 are shown in the table below. The table below shows the cash flow of the last two years of the investment with some values missing: Assume the Tax rate to be 20%. BT&LCF - Before Tax and Loan Cash Flow. ΕΟΥ 9 10 BT&LCF PPMT 100,000 45000 150,000 40000 IPMT 5000 10000 A) What is Taxable Income in year 9? (Y1) DWO $15,000 $5,000 TI Y1 Y5 TAX Y2 Y6 C) What is the book value of the equipment at the end of year 10? ATCF Y3 Y7 B) What is the After-tax Cash Flow for year 9? (Y3) [hint: You need to first calculate Y2].

Answer rating: 100% (QA)

A To calculate the taxable income in year 9 we need to find the taxable income before tax BT and sub... View the full answer