Question

A company with taxable income of $350,000 is considering the purchase of computer equipment at a cost of $20,000. The costs of operation are of $300 per year. This equipment generates savings ascending to $4000 the first year, with a $400 raise per year until the end of the seventh year. The company utilizes the precision method MACRS. a) Complete the following table to determine the box plot after taxes. Year 1 2 3 4 5 6 7 Box Plot Depreciation Depreciation Taxable Taxes before tax rate income Box plot after tax b) consider that the equipment was sold for $4000 at the end of the 7th year. Recalculate the box plot after tax taking into consideration the sale of the equipment. |

          A company with taxable income of $350,000 is considering the purchase of computer equipment at a
cost of $20,000. The costs of operation are of $300 per year. This equipment generates savings
ascending to $4000 the first year, with a $400 raise per year until the end of the seventh year. The
company utilizes the precision method MACRS.
a) Complete the following table to determine the box plot after taxes.
Year
1
2
3
4
5
6
7
Box Plot
Depreciation Depreciation Taxable
Taxes
before tax rate
income
Box plot
after tax
b) consider that the equipment was sold for $4000 at the end of the 7th year. Recalculate the box plot
after tax taking into consideration the sale of the equipment. |

A company with taxable income of 350,000 is considering the purchase of computer equipment at a
cost of20,000. The costs of operation are of 300 per year. This equipment generates savings
ascending to4000 the first year, with a 400 raise per year until the end of the seventh year. The
company utilizes the precision method MACRS.
a) Complete the following table to determine the box plot after taxes.
Year
1
2
3
4
5
6
7
Box Plot
Depreciation Depreciation Taxable
Taxes
before tax rate
income
Box plot
after tax
b) consider that the equipment was sold for4000 at the end of the 7th year. Recalculate the box plot
after tax taking into consideration the sale of the equipment. |

Added by Claudia B.

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