Question: A corporation has decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and was being

A has decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and was being depreciated under MACRS using a five-year recovery period. The existing asset can be sold for 25,000. The new asset will cost $75,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on ordinary income and capital gains, the initial investment is
(A)$42,000
(B)$52,440
(C)$54,240
(D)$50,000

Step by Step Solution

★★★★★

3.51 Rating (168 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Saleable Value of Old Asset 25000 GainLoss on Sale of Ass... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

1019-B-C-A-C-P-A(3146).docx

120 KBs Word File

Students Have Also Explored These Related Cost Accounting Questions!

Snowsports Company operates a snowsports resort for skiers and snowboarders. The company has recently decided to replace an existing old chair lit with a new high speed quad chair and expand the hill...

Skyline Corporation has decided to expand its operations and has purchased land in Salina for construction of a new manufacturing plant. The following costs were incurred in purchasing the property...

Walesco Corporation has decided to discontinue an entire component of its business effective November 1, 2008. It hopes to sell the assets involved and convert the physical plant to other uses within...

MACRS RATE Recovery 10 3 years 5 years 7 years year years 133% 20% 14% 10% 245 32 25 18 315 19 18 14 47 12 12 12 51 12 9 19 6 15 19 18 7 19 17 8 4 16 9 16 10 16 11 14 A corporation has decided to...

Show all of your calculations with appropriate explanation. You won't earn any point without showing all of your calculation work. MBA618.51FA2016 Final Exam Part II (Available points=50pts) *You are...

Russell Industries is considering replacing a fully depreciated machine that has a remaining useful life of 10 years with a newer, more sophisticated machine. The new machine will cost $350,000 and...

1. The management of Jasper Equipment Company is planning to purchase a new milling machine that will cost $160,000 installed. The old milling machine has been fully depreciated but can be sold for...

A corporation has decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and was being depreciated under MACRS using a five-year recovery...

MACRS RATE Recovery year 3 years 5 years 7 years 10 years 33% 20% 1495 10% 2 45 32 25 18 3 15 19 18 14 4 7 12 12 12 5 12 9 9 6 5 9 8 7 9 7 8 6 9 6 10 6 11 anos A corporation has decided to replace an...

MACRS RATE Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45 32 25 18 3 15 19 18 14 4 7 12 12 12 5 12 9 9 6 5 9 8 7 9 7 8 4 6 9 6 10 6 11 4 A corporation has decided to replace an...

Betsys new novel will be published next month. Neither Betsy nor her publisher has yet applied for copyright registration for the book. What approach should Betsy or the publisher take to ensure a...

A particle of mass m1 with initial laboratory velocity u1 collides with a particle of mass m2 at rest in the LAB system. The particle m1 is scattered through a LAB angle and has a final velocity v1,...

Noninterest-bearing note - installments 4. On January 1, 20x1, Lot Co. acquired a machine in exchange for a P4,800,000 noninterest-bearing note due as follows: Date Amount December 31, 20x1 P...

a. If Hershey Park cannot successfully segment the two markets, what are the profit-maximizing price and quantity? What is its maximum possible profit?

A pitched flat roof truss is loaded as shown. Determine the force in members EG, GH, and HJ. 2 kips 4 kips 4 kips 4 kips 2 kips 1.5 ft 7.5 ft EJ 7 ft 7ft 7 ft

A Howe scissors roof truss is loaded as shown. Determine the force in members DF, DG, and EG. 2AN KN 2kN F! 1AN L5 m

A Howe scissors roof truss is loaded as shown. Determine the force in members GI, HI, and HJ. 2AN 2AN 2AN 2AN TEN 15 m

Use the following to answer Questions 1 3 Firm X Y Assets $1.2 million $1.7 million Debt $500,000 1.4 million Sales $3.5 million 3.5 million Earnings $277,000 $377,000 1. (5 points possible) Based...

5-11 Prob/Stat Unit 6 Project- Sampling Distributions You should use your calculator or a spreadsheet to do the calculations you need, be sure to explain what you did to get your answers. 1. What is...

CONTEXT: Malaysia leads in sustainable and responsible investing (SRI) sukuk issuance among the Asean6 countries, accounting for US$3.9 billion (RM16.33 billion) of issuance value or 56% of the total...