60. Consider an asset that costs $459,000 and is depreciated…

Question Answered step-by-step 60. Consider an asset that costs $459,000 and is depreciated…  60. Consider an asset that costs $459,000 and is depreciated straight-line to zero over its 6-year taxlife. The asset is to be used in a 4-year project; at the end of the project, the asset can be sold for$120,000. If the relevant tax rate is 34 percent, what is the net aftertax cash flow from the sale of this asset?A. $131,220B. $127,840C. $116,500D. $97,600E. $79,200 61.  Krishna is at it again. She never finished her retirement plan and wants to runnew numbers so that she can begin her first contributions in the New Year.First she realizes that she will need more money in retirement and now plans to withdraw $5,000 atthe end of each month of her retirement. She assumes all contributions and withdrawals to her 401(k)Plan are made at the end of each month.Krishna is now 30 years old and decides her previous estimate of retiring early at 55 years old was alittle aggressive. She did some research and now assumes she will use the average age of retirementin the United States which is 62 years old. She further researches the average life expectancy and shereluctantly revises her forecast down to 77 years and 5 months old in the United States. Krishna’existing balance in her 401(k) Plan is now $3,955.71.She figures that she should be able to increase her contribution over the years as her earning powerincreases. She intends to double her contribution in the second savings period and double it again ina new third savings period. She also called her company’s Human Resources department and waspleased to hear that her employer will match 75% of her contributions.Krishna revisits her Chapter 10 historical average returns and now hopes to receive 13% annualreturn compounded monthly during her first savings period (180 months from 1/1/2023 through12/31/2037), 10% during her second savings period (144 months from 1/1/2038 through 12/31/2049),8% during her third savings period (60 months from 1/1/2050 through 12/31/2054), and 6% duringher retirement period (185 months from 1/1/2055 through 5/31/2070).Krishna now understands that she can make these contributions to her 401(k) Plan before taxes aretaken out. She assumes the tax rate will be 34% during the savings periods. At 34%, if Krishnacontributes $1 of her after-tax take-home pay, the gross amount she will be able to contribute to her401(k) Plan is $1.52 (calculated as $1.52 – $1.52(0.34) = $1). In other words, by contributing $1.52(rounded) to her 401(k) account, Krishna’s take-home pay is only reduced by $1.Krishna would also like to leave behind two gifts upon her death. She would like $50,000.01 each togo to her first two grandchildren who attain Master’s degrees from NYU. Alternatively, if there arenot two grandchildren who meet the condition, Krishna would like the remaining amount to be givento NYU to fund corona-virus research.Image transcription textSummary Saving Period 1 Begin date1/1/2023 End date 12/31/2037Beginning age 30 Ending … Show more… Show more How much should Krishna begin contributing monthly in January 2023 from her after-tax take-homepay?A. $50.00B. $101.23C. $113.14D. $199.40E. $415.47F. $1,098.49G. $5,000.00H. none of the above  62. Jennifer is considering a new five-year cost cutting proposal that wouldeliminate the Benefits Call Center (a portion of the company’s Human Resources department). Theproposal is to outsource the work to another company called Open House.Open House is offering to sell the company specialized software that Jennifer’s company would puton their website. The software would automatically answer many of the employees’ questions aboutbenefits through a series of automated “chat bots” that simulate real human interaction. The one-timecapital expense of this software would be $350,000 and it is expected that the software will have auseful life of five years. Open House would also handle all calls from employees that cannot beanswered by the software at an annual charge of $250,000 for each of the five years.The Benefits Call Center is currently staffed by six employees. All six employees of the BenefitsCall Center would be given severance packages (a fixed cost in year 1) equal to three weeks per yearof the employees’ service with the company, except for the Assistant Manager who will remain withthe company to manage the account with Open House. The company pays 17% benefits & taxes onsalaries, wages, and severance. The employees’ salary & wages, years of service, severance in Year1, and estimated annual savings are as follows:Image transcription textAnnual Weekly Years Salary &Wages Salary & Wages of ServiceManager 150,000.00 2,8… Show more… Show more Jennifer’s company depreciates all assets on a straight-line basis over their useful lives. Thecompany’s required return on any project is 13% and the company has an income tax rate of 32%.The company’s DuPont identity is as follows:Image transcription textROE Profit Margin X Total assetturnover X Equity multiplier 8.4% 21% X0.337 X 1.18… Show more What is the payback for this project?A. 2.34B. 2.48C. 2.66D. 2.81E. 3.21F. 3.35G. 5.17H. does not payback Business Finance FINC-GB 2302 Share QuestionEmailCopy link Comments (0)