BUSINESS COLLEGE

An asset used in a four-year project falls in the five-year MACRS class for tax purposes The asset has an acquisition cost of $5,100,000 and will be sold for $1,600,000 at the end of the project. If the tax rate is 21 percent, what is the aftertax salvage value of the asset? Refer to Table 10.7 (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Answers

Answer 1

Answer:

Answer:

$1,449,068.80

Explanation:

Book value on purchase $5,100,000

Less: Accumulated depreciation $4,218,720

(5,100,000*(0.2+0.32+0.192+0.1152)

Book value on sales $881,280

Salvage value of paint $1,600,000

Book value of as set $881,280

Gain on disposal $718,720

Tax on gain on disposal = $718,720 * 21% = $150,931.20

After tax cash flow = $1,600,000 - $150,931.20

After tax cash flow = $1,449,068.80

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Assume Gillette Corporation will pay an annual dividend of $ 0.61 one year from now. Analysts expect this dividend to grow at 12.9 % per year thereafter until the 6th year. Thereafter, growth will level off at 1.7 % per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 8.8 %?

Answers

Answer:

what is the value of a share of Gillette stock if the firm's equity cost of capital is 8.8 %?

$ 13,36

Explanation:

First it's necessary to find the present value of the annual dividend paid during the next 6 years, which is calculate by the formula of the Present Value.

PV = Dt / (1+r)^t , it means that each Dividend at the year "t" will be value with the rate r calculated a this same moment "t".

Will pay an annual dividend of $ 0.61 one year from now. Analysts expect this dividend to grow at 12.9 % per year thereafter until the 6th year.

Year 1

0,61 = Div

1,09 = (1+0,88)^1

0,56 = Div/1,09

Year 2

0,69 = Div Year 1(0,61) * 1,129, because increase at 12,9% by year

1,18 = (1+0,88)^2

0,58 = Div/1,18

Year 3

0,78 = Div Year 2(0,69) * 1,129, because increase at 12,9% by year

1,29 = (1+0,88)^3

0,60 = Div/1,18

Year 4

0,88 = Div Year 3(0,78) * 1,129, because increase at 12,9% by year

1,24 = (1+0,88)^4

0,63 = Div/1,24

Year 5

0,99 = Div Year 4(0,88) * 1,129, because increase at 12,9% by year

1,52 = (1+0,88)^5

0,65 = Div/1,52

Year 6

1,12 = Div Year 5(0,99) * 1,129, because increase at 12,9% by year

1,66 = (1+0,88)^6

0,67 = Div/1,66

PV of 6 Years= 0,56 + 0,58 + 0,60 + 0,63 + 0,65 + 0,67 = $3,70

Thereafter, growth will level off at 1.7 % per year.

To this second part the model indicates that de dividend is calculated by = Dividend /(Rate-Growth) , which means that if a dividend grows forever, we applied the perpetuity formula where dividend growth it's applied as negative to the discount rate.

Year 6

1,14 = Div Year 6(1,12) * 1,017, thereafter will growth at 1,7% by year.

7,1% = (8,8%-1-7%) Discount rate less growth of dividend.

16,03 = Div/0,071 = In this case we use the rate not the 1+rate.

This value it's calculated at the moment of Year 7, we need to apply the Present Value to calculate the actual value, which is:

16,03 = Perpetuity calculated before until year 6.

1,66 = Discount Rate applied this year.

9,66 = Present Value of the Dividen which grows forever at 1,7%

TOTAL Value of Share = PV of 6 Years + PV Perpetuity =

$3,70 + $9,66=$13,36

We can now say that Lacey has an ______________ for her position.

Answers

Answer:

admiration ????

Explanation:

The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)

Answers

Answer:

Operating Activity

Explanation:

The Indirect method, reconciles the Operating Profit to the Operating Cash Flow by adjusting the following items (1) Non Cash flow items previously added or deducted from Operating Profit and (2) Changes in Working Capital items.

Amortization of bond premium is an item of non-cash flow that was previously deducted from Operating Profit and needs to be added back.

Derek, a cash basis, unmarried taxpayer, had $1,580 of state income tax withheld during 2019. Also in 2019, Derek paid $158 that was due when he filed his 2018 state income tax return and made estimated payments of $3,160 towards his 2019 state income tax liability. When Derek files his 2019 Federal income tax return in April 2020, he elects to take the standard deduction, which reduced his taxable income. As a result of overpaying his 2019 state income tax, Derek receives a refund of $1,106 in 2020.How much of the $1,106 will Derek include in his 2020 gross income?

Answers

Answer:

Explanation:

The deductions made as seen were in the year 2019.

If Derek elects to take standard deduction in filling federal income tax return, the amount of refund will not be taxable and not to be included in 2020 gross income

Hence, no tax benefit rule applies as the standard deduction was taken in 2019.

Amount of refund that will be included in 2020 gross income is thus $0

Assume that the custodian of a $450 petty cash fund has $65 in coins and currency plus $382 in receipts at the end of the month. The entry to replenish the petty cash fund will include:______a. A debit to Cash for $388.50.
b. A credit to Cash Over and Short for $4.00.
c. A debit to Petty Cash for $392.50.
d. A credit to Cash for $396.50.
e. A debit to Cash for $396.50.

Answers

Answer:

The correct answer would be:

A credit to cash of $385. However, this is not an option indicated. But, according to the figures provided, the answer i recommend is correct.

Explanation:

Debit: Various expenses $382

Debit: Cash shortage ($450 - $382 - $65) $3

Credit: Cash: 385

To record entry to replenish the petty cash fund.

The entry to replenish the petty cashfund will include a debit to Cash for $396.50. The correct option is e.

The custodian must record a debit to the Petty Cash account to raise it back to the starting balance of $450 in order to replenish the petty cash fund. $382 + $65 = $447 in total receipts and cash on hand (coins and currency).

The custodian is short by $2.50 because the initial fund amount is $450. A debit of $396.50 ($450 - $2.50) will be issued from Cash to reflect the amount owed to the custodian in order to return the Petty Cash account to $450.

Thus, the correct option is e.

For more details regarding custodian, visit:

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Equipment was purchased for $300,000. Freight charges amounted to $14,000 and there was a cost of $40,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $60,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be:________. a. $70,800 b. $58,800 c. $49,200 d. $48,000

Answers

Answer:

Annual Depreciation expense= $58,800

Explanation:

According to International Accounting standards(IAS) 16 property plan and equipment (PPE), the cost of an asset is the purchase cost plus other costs of bringing it to the intended working conditions.

So we will add the purchase cost to installation , freight charges.

Cost of assets = 300,000 + 14,000 + 40,000 =$354,000

Annual depreciation = (Cost - Scrap Value)/ Number of years

= (354,000 - 60,000)/5

=$58,800

Annual Depreciation expense= $58,800

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