General Food Corp. operates a water filtering and purification system at its Halifax plant. This system...
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General Food Corp. operates a water filtering and purification system at its Halifax plant. This system was purchased four years ago at a cost of $4,200,000. The purchase was partially financed by a $4,000,000 loan obtained from the Commercial Bank of Halifax. The loan is being repaid (principal and interest) by six equal (end of year) annual payments. The loan interest rate is 6% (yearly compounding). The income tax rate is 30%. The capital cost allowance rate for water filtering and purification systems is 30%. Some additional financial information - estimated revenues and costs for the current (fifth) year of operation of this system are given below: Revenue Operating cost Maintenance cost $8,220,000 $3,600,000 $1,100,000 Determine: a) the capital cost allowance in the current (fifth) year b) the yearly loan payment c) the interest portion of the fifth loan payment d) the income tax payable in the current (fifth) year e) the after tax cash flow in the current (fifth) year (3 marks) (3 marks) (3 marks) marks) (9 (7 marks) General Food Corp. operates a water filtering and purification system at its Halifax plant. This system was purchased four years ago at a cost of $4,200,000. The purchase was partially financed by a $4,000,000 loan obtained from the Commercial Bank of Halifax. The loan is being repaid (principal and interest) by six equal (end of year) annual payments. The loan interest rate is 6% (yearly compounding). The income tax rate is 30%. The capital cost allowance rate for water filtering and purification systems is 30%. Some additional financial information - estimated revenues and costs for the current (fifth) year of operation of this system are given below: Revenue Operating cost Maintenance cost $8,220,000 $3,600,000 $1,100,000 Determine: a) the capital cost allowance in the current (fifth) year b) the yearly loan payment c) the interest portion of the fifth loan payment d) the income tax payable in the current (fifth) year e) the after tax cash flow in the current (fifth) year (3 marks) (3 marks) (3 marks) marks) (9 (7 marks)
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a the capital cost allowance in the current fifth year 420000... View the full answer
Related Book For
Managerial Accounting An Introduction to Concepts Methods and Uses
ISBN: 978-0324639766
10th Edition
Authors: Michael W. Maher, Clyde P. Stickney, Roman L. Weil
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