题目
题目

MSB-250-300-002 Topic 12 Quiz

单项选择题

Use the following information to answer the next seven questions. You have old equipment with a current market value of $6,000 if sold today. The old equipment has a current book value of $10,000 and is fully depreciated (i.e., no future depreciation will be claimed even if you forego the expansion project and continue to own and use the old equipment). The project will increase annual revenues by $50,000 and annual operating costs by $10,000. Expansion will require the purchase of new, high-tech equipment at a cost of $100,000. Additionally, you will incur shipping costs of $10,000 on the new equipment. If purchased, the new equipment will be depreciated via the 5-year MACRS schedule (20.0%, 32.0%, 19.2%, 11.5%, 11.5%, 5.8%). You estimate the market value of the new equipment to be $20,000 in 5 years, at which time you anticipate selling the equipment. If the new equipment is purchased, the old equipment will be sold, and your working capital requirements will increase immediately by $30,000. The entire $30,000 working capital investment will be recovered at the end of the 5-year project. Your firm has a 10% cost of capital and a tax rate of 40%. What is the tax implication of selling the old machine?

选项
A.tax shield of $1,600
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思路分析
Question restatement: We are evaluating the tax implications of selling the old machine when the new equipment is purchased. The old equipment has a current market value of $6,000, a current book value of $10,000, and is fully depreciated for future tax purposes. If we proceed with the project, the old equipment will be sold, triggering a taxable event. Tax rate is......Login to view full explanation

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