Mikes Inc. is considering the purchase of a $116,000 piece of equipment. The equipment is...
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Accounting
Mikes Inc. is considering the purchase of a $116,000 piece of equipment. The equipment is classified as 5-year MACRS property. The company expects to sell the equipment after two years at a price of $50,000. The tax rate is 35 percent.
What is the expected after-tax cash flow from the anticipated sale?
b). Two years ago, Alans Inc. purchased land at a price of $3,000,000 plus $460,000 in real estate costs. Today, this new land has a market value of $4,000,000. The firm is now considering building a factory on that land. The construction cost of the factory is estimated at $295,000. In addition, $70,000 worth of leveling the surface of the land will be required to prepare the construction site. What is the initial cash flow of this project?
Explain your answer in detail and add formulas for better understanding
MACRS 5-year properly Year Rate 1 20.00% 2 32.00% 3 19. 20% 4 11.52% 11.52% 5.76% tin
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