Q1) A piece of equipment is purchased for $70,000 with a salvage value of $2,000. At the end of 5 years the equipment is sold for $35,000. If the company is in the 36% tax bracket, compute the taxes owed in year 5 after selling the equipment for $35,000:
a) Using Straight Line Depreciation and a depreciable life of 7 years:
b) Using MACRS 7 year property depreciation:
Q2) If a company earns $500,000 in revenue, and has $100,000 in allowable expenses, calculate the:
a) State Tax owed if 9% State Tax Rate
b) Federal Tax owed:
c) The Combined incremental tax rate
Q3) The auto of your dreams costs $20,000 today. You have found a way to earn 15% tax free in a savings account. If the cost of your dream car is expected to increase 10% every year, how much must be deposited into the savings accounttodayto provide for the purchase of the auto in 5 years?