Author: Anonymous

A manufacturer purchased a new machine. The machine has an anticipated life of 10 years, cost $800,000, and has a salvage value of $10,000.  The company can depreciate the machine for tax purposes using MACRS with a 7‑year recovery period. Using MACRS depreciation, What is the depreciation rate for year 4? [mr4] (four decimals) What is the depreciation charge for year 4? $[md4] (nearest dollar) What is the book value at the end of year 4? $[mb4] (nearest dollar)

Rx, Ltd. sold its prescription drug business to Goliath, Inc. for $3.1 billion. The income from product sales is $2 billion per year, and net profit is 20% of sales. What annual rate of return will Goliath make over a 10-year planning horizon? [ror] 

Three years ago, the Lucky Strike mine in Arizona was purchased for $80,000. At the time of purchase, the mine contained 1,000 tons of mica. Production, sales, and taxable income for the first three years were: Year Extracted Mica (tons) Sales ($) Taxable Income ($) 1 60 18,700 20,000 2 200 60,000 27,000 3 120 57,950 40,000 The cost depletion amount for Year 2 was $16,000. (Round answers to nearest dollar.) Determine the percentage depletion amount for Year 2.  $[p2] What depletion allowance should Lucky Strike take for Year 2?  $[t2]

Depreciation Recapture occurs when [what] 

The Salvage Value of an asset is [what] 

A manufacturer plans to spend $3,700,000 on equipment that will be depreciated using the MACRS method and a 5-year recovery period. The manufacturer uses a 6-year study period for these types of purchases and plans to keep the equipment indefinitely. Gross Income, Operating Expenses and the Depreciation Charge are given below for Year 5, with the Cash Flow After Taxes for the rest of the study period. The manufacturer’s combined marginal tax rate is 39%. Year GI OE CFBT Dt TI Taxes CFAT 0 −$3,700,000 1 $807,100 2 $1,041,260 3 $917,556 4 $687,734 5 $1,580,000 $330,000 (a) $426,240 (b) (c) (d) 6 $906,617 Round to nearest dollar. For Year 5, what is the cash flow before taxes, CFBT? $[cb] For Year 5, what is the taxable income, TI? $[ti] For Year 5, what is the amount of taxes, Taxes? $[x] For Year 5, what is the cash flow after taxes, CFAT? $[ca] What is the after-tax Rate of Return over the study period? [ror]%  (one decimal) If the company’s MARR is 15%, should they invest in this equipment, YES or NO? [in]

Rx, Ltd. sold its prescription drug business to Goliath, Inc. for $3.1 billion. The income from product sales is $2 billion per year, and net profit is 20% of sales. What annual rate of return will Goliath make over a 9-year planning horizon? [ror] 

When analyzing five alternatives that have different lives with the Annual Equivalent-Worth (AE) method, you must [what] 

Benjamin states that asking for the authentic print from a photographic negative makes no sense. What is his argument?  

This is Andy Warhol’s Thirty Are Better Than One. In this work Warhol takes a photograph of the Mona Lisa and repeats it thirty times. Using Benjamin’s argument, what is Warhol showing about what mechanical reproduction does to an image like the Mona Lisa?