Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. bill sharpe, owner of sharper knives inc., is clos

Bill Sharpe, owner of Sharper Knives Inc., is closing the scissor sharpening division of his...

50.1K

Verified Solution

Question

Finance

Bill Sharpe, owner of Sharper Knives Inc., is closing the scissor sharpening division of his business at the end of the current fiscal year. The division's sole asset, the scissorminussharpening machine, was purchased four years ago for $250,000. The asset is in Class 43 with a depreciation rate of 30%. A depreciation table for the asset is shown below. Bill has agreed to sell the machine at the end of the year (Year 4) for $100,000. What is the present value of the tax shields gained (lost) as a result of the sale of the machine? (As of Year 4.) The tax rate is 35% and Bill's cost of capital is 9.7%. Round your answers to the nearest dollar.

image

Please explain the answer step by step. Thank you!

Depreciation Table for Scissor Sharpener Year 1 Year 2 Year 3 148,750 0.300 44,625 104,125 Year4 UCC t-1 Depreciation Rate Depreciation Expense UCC t 250,000 212,500 0.300 63,750 212,500 148,750 104,125 0.300 31,238 72,888 0.150 37,500

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

You receive an inheritance of a thirty-year annuity, which pays 1 at the end of the...

Basic Math
1.2K views

During the first quarter of 2015, Toronto Dominion Bank (TD) stock cost $45 per share, was...

Physics
1.2K views

c 6 37V d IIV 41 In an a c circuit the potential difference across...

Physics
1.2K views

1. A large anchor is being lifted into a boat with metal sides. As the...

Geometry
1.2K views

11 Find the value of x in the following diagram E H X 15 3x...

Basic Math
1.2K views

a What is the company s total debt 908 000 b What is the amount...

Accounting
1.2K views

Cycling Corporation identified the following budgeted data for this year. The company produces...

Accounting
1.2K views

The management of Furrow Corporation is considering dropping product LO7E. Data from the...

Accounting
1.2K views

Provide the JE for purchasing $10 of logs when you make 2x4s. Select one:...

Accounting
1.2K views

Data from the financial statements of Naranjo Co. and Jablonsky, Inc. are presented below (in...

Accounting
1.2K views

Assume that the U.S. one-year interest rate is 5 percent and the one-year interest rate...

Accounting
1.2K views

Parent plc acquired 80% of the ordinary share capital of Subsidiary plc on 1 January...