1. A distributor of computer software instruction manuals plans to expand distribution. Annual sales are currently $2...
Question:
1. A distributor of computer software instruction manuals plans to expand distribution. Annual sales are currently $2 million and are expected to be $2.1 million next year and $3.08 million the year after. Assuming that expenses are 80% of sales each year,
what are the distributor’s current after-tax cash flows and projected after-tax cash flows next year and the year after if the tax rate is 34%? Assume there is no depreciation.
2. MBI Corp. is considering purchasing one of two types of machinery. The first type, costing $800,000, is expected to last for 10 years. The second type, costing $1.2 million, is expected to last for 15 years. Assuming that straight line depreciation is used, and that the salvage values are zero,
what is the annual depreciation schedule for each type of machinery?
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill