Calculating initial cash flow DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The...
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Calculating initial cash flow DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $136,000. The firm has a chance to sell its 3-year-old roaster for $35,600. The existing roaster originally cost $59,400 and was being depreciated using MACRS and a 7-year recovery period (see the table ). DuPree is subject to a 21% tax rate. a. What is the book value of the existing roaster? b. Calculate the after-tax proceeds of the sale of the existing roaster. c. Calculate the change in net working capital using the following figures: Anticipated Changes in Current Assets and Current Liabilities Accruals Inventory -$19,200 +50,400 a. The remaining book value of the existing roaster is $ (Round to the nearest dollar.) a. Data table Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 1 33% 20% 14% 2 45% 32% 25% 3 15% 19% 18% 4 7% 12% 12% 5 12% 9% 6 5% 9% 7 9% 8 4% 9 10 11 Totals 100% 100% 100% These percentages have been rounded to the nearest whole percent to simplify calcu retaining realism. To calculate the actual depreciation for tax purposes, be sure to app unrounded percentages or directly apply double-declining balance (200%) depreciatio half-year convention. X Calculating initial cash flow DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $136,000. The firm has a chance to sell its 3-year-old roaster for $35,600. The existing roaster originally cost $59,400 and was being depreciated using MACRS and a 7-year recovery period (see the table ). DuPree is subject to a 21% tax rate. a. What is the book value of the existing roaster? b. Calculate the after-tax proceeds of the sale of the existing roaster. c. Calculate the change in net working capital using the following figures: Anticipated Changes in Current Assets and Current Liabilities Accruals Inventory -$19,200 +50,400 a. The remaining book value of the existing roaster is $ (Round to the nearest dollar.) a. Data table Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year Recovery year 3 years 5 years 7 years 1 33% 20% 14% 2 45% 32% 25% 3 15% 19% 18% 4 7% 12% 12% 5 12% 9% 6 5% 9% 7 9% 8 4% 9 10 11 Totals 100% 100% 100% These percentages have been rounded to the nearest whole percent to simplify calcu retaining realism. To calculate the actual depreciation for tax purposes, be sure to app unrounded percentages or directly apply double-declining balance (200%) depreciatio half-year convention. X
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Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
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