Solutions to Chapter 1

Depreciation expense per year = $40/5 = $8 million. Book value of old equipment = $40 – (3 ( $8) = $16 million. After-tax cash flow = $18 – [0.35 ( ($18 – $16)] = $17.3 million Using the seven-year ACRS depreciation schedule, after five years the machinery will be written down to 22.30% of its original value: 0.2230 ( $10 million = $2.230 ... ................
................

In order to avoid copyright disputes, this page is only a partial summary.