Chino Materials
Submitted by andymcgintyiv on December 1, 2011
- Category: Business
- Words: 1913
- Pages: 8
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- Popularity Rank: 4354
Chino Materials
1.
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• MACRS allowances sum up to 1 and the depreciation expense um to the depreciable basis of $303,000 all because all 6 years of deprecation will be taken.
• Depreciation shield, tax savings, in each year is the tax rate of .36 times that year’s depreciation expense. Ex. Yr. 1, .36(60,600) = $21,816
• The depreciation tax savings equal $109,081 = .36(303,000) which is tax rate times years depreciation expense
• After tax operating tax savings = (1-t)(annual savings) = .64(76000) = $48,640, and this amount will be added to the depreciation tax savings to find the net after-tax operating cash flow
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