Homework Answers
Question 12
Answer 2) You are engaging in an activity that produces cash flow greater than the depreciation of the asset purchased
By knowing that the asset will depreciates in value over three years, you are purchasing the asset.
This means that the activity in which you are engaged in must provide you higher returns than the rate of depreciation
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Question 12 (2 points) You purchase an asset that depreciates in value over a three year...
In year 1. Fim A paid $58,000 cash to purchase a tangible business asset. In year 1 and year 2, it deducted $...
In year 1. Fim A paid $58,000 cash to purchase a tangible business asset. In year 1 and year 2, it deducted $3,620 and $8,000 depreciation with respect to the asset. Firm A's marginal tax rate in both years was 21 percent. a. Compute Firm A's net cash flow attributable to the asset purchase in each year. b. Compute Firm A's adjusted basis in the asset at the end of each year. Complete this question by entering your answers in...
Question 1 2 pts Information on a depreciable asset is as follows: Purchase date 1/1/2015 Purchase...
Question 1 2 pts Information on a depreciable asset is as follows: Purchase date 1/1/2015 Purchase price $45,000 $5,000 Salvage value Useful life 8 years Depreciation method straight-line If the asset is sold on July 1, 2019 for $20,000, the journal entry to record the sale will include: (Note: Remember to calculate the depreciation taken to the date of sale.) Acredit to cash for $20,000. Adebit to loss on sale for $2,500. A debit to accumulated depreciation for $25,000. ....
Question 6 (2 points) If the calculated NPV is positive, then which of the following must...
Question 6 (2 points) If the calculated NPV is positive, then which of the following must be true? The discount rate used is Greater than the internal rate of return. Less than the internal rate of return. Equal to the internal rate of return. Too high Question 7 (2 points) 1. A major disadvantage of the payback period method is it Does not directly account for the time value of money. Ignores cash flows beyond the payback period. All of...
Beyer Company is considering the purchase of an asset for $370.000. It is expected to produce...
Beyer Company is considering the purchase of an asset for $370.000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Year 1 $86,000 Year 2 $49,000 Year 3 $70,000 Year 4 $300,000 Year 5 $12,000 Total $517,000 Net cash flows Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback period answer to 2 decimal place.) Year Cash inflow (Outflow)...
Question 2 Part A (2 points): Select "True" or "False" and correct false statements and mark...
Question 2 Part A (2 points): Select "True" or "False" and correct false statements and mark your answers in the talte ast page: 1. When developing feasible alternatives, the "nominal group technique" aims at incorporating individual ideas into a group consensus. It also removes the undesirable effect of classical brainstorming. True False 2. For solutions to engineering problems to be economically acceptable, the long-term benefits of these solutions must be equal or more than their long-term costs, among other things....
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset...
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.480.000. The fixed asset will be depreciated straight- line to zero over its three-year tax life. The project is estimated to generate $3.470.000 in annual sales. with costs of $2.450.000. The project requires an initial investment in net working capital of $158,000 and the fixed asset will have a market value of $193,000 at the end of the project. Assume that the...
Question 4 2 Points A financial statement analysis conducted cted over a three to five-year period...
Question 4 2 Points A financial statement analysis conducted cted over a three to five-year period is called trend analysis True False Question 5 ( 2 Points The treasurer of a corporation usually reports to the CFO of the firm. True False Question 6 2 Points A firm's current ratio changed from 14 times in the previous year to 1.6 times this year. Concluding that the firm's liquidity improved 5 14.34 True False
CHAPTER 11: QUESTION 2 Previous An asset falling under the MACRS five-year class was purchased three...
CHAPTER 11: QUESTION 2 Previous An asset falling under the MACRS five-year class was purchased three years ago for $200,000 (its original depreciation basis). Calculate the cash flows if the asset is sold now at $60,000. $
Quad Enterprises is considering a new three-year expans investment of $2.38 million. The fixed asset will...
Quad Enterprises is considering a new three-year expans investment of $2.38 million. The fixed asset will be depre life. The project is estimated to generate $1,760,000 in project that requires an initial fixed asset straight-line to zero over its three-year tax annual sales, with costs of $670,000. The project atient in net working capital of $350,000, and the fixed asset will have a market a. If the tax rate is 25 percent, what is the pr oject's Year 0 net...
Assume a cash basis taxpayer purchased a three-year certificate of deposit on January 1 of the...
Assume a cash basis taxpayer purchased a three-year certificate of deposit on January 1 of the current year. Under the original issue discount (OID) rules which of the following is true? a.All of the income must be recognized in the year of maturity. b.The interest income will be recognized equally over three years. c.The OID will be included in gross income for the year of purchase. d.The interest income will be recognized over three years but will be greater in...
In year 1. Fim A paid $58,000 cash to purchase a tangible business asset. In year 1 and year 2, it deducted $3,620 and $8,000 depreciation with respect to the asset. Firm A's marginal tax rate in both years was 21 percent. a. Compute Firm A's net cash flow attributable to the asset purchase in each year. b. Compute Firm A's adjusted basis in the asset at the end of each year. Complete this question by entering your answers in...
Question 1 2 pts Information on a depreciable asset is as follows: Purchase date 1/1/2015 Purchase price $45,000 $5,000 Salvage value Useful life 8 years Depreciation method straight-line If the asset is sold on July 1, 2019 for $20,000, the journal entry to record the sale will include: (Note: Remember to calculate the depreciation taken to the date of sale.) Acredit to cash for $20,000. Adebit to loss on sale for $2,500. A debit to accumulated depreciation for $25,000. ....
Question 6 (2 points) If the calculated NPV is positive, then which of the following must be true? The discount rate used is Greater than the internal rate of return. Less than the internal rate of return. Equal to the internal rate of return. Too high Question 7 (2 points) 1. A major disadvantage of the payback period method is it Does not directly account for the time value of money. Ignores cash flows beyond the payback period. All of...
Beyer Company is considering the purchase of an asset for $370.000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Year 1 $86,000 Year 2 $49,000 Year 3 $70,000 Year 4 $300,000 Year 5 $12,000 Total $517,000 Net cash flows Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback period answer to 2 decimal place.) Year Cash inflow (Outflow)...
Question 2 Part A (2 points): Select "True" or "False" and correct false statements and mark your answers in the talte ast page: 1. When developing feasible alternatives, the "nominal group technique" aims at incorporating individual ideas into a group consensus. It also removes the undesirable effect of classical brainstorming. True False 2. For solutions to engineering problems to be economically acceptable, the long-term benefits of these solutions must be equal or more than their long-term costs, among other things....
H. Cochran, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.480.000. The fixed asset will be depreciated straight- line to zero over its three-year tax life. The project is estimated to generate $3.470.000 in annual sales. with costs of $2.450.000. The project requires an initial investment in net working capital of $158,000 and the fixed asset will have a market value of $193,000 at the end of the project. Assume that the...
Question 4 2 Points A financial statement analysis conducted cted over a three to five-year period is called trend analysis True False Question 5 ( 2 Points The treasurer of a corporation usually reports to the CFO of the firm. True False Question 6 2 Points A firm's current ratio changed from 14 times in the previous year to 1.6 times this year. Concluding that the firm's liquidity improved 5 14.34 True False
CHAPTER 11: QUESTION 2 Previous An asset falling under the MACRS five-year class was purchased three years ago for $200,000 (its original depreciation basis). Calculate the cash flows if the asset is sold now at $60,000. $
Quad Enterprises is considering a new three-year expans investment of $2.38 million. The fixed asset will be depre life. The project is estimated to generate $1,760,000 in project that requires an initial fixed asset straight-line to zero over its three-year tax annual sales, with costs of $670,000. The project atient in net working capital of $350,000, and the fixed asset will have a market a. If the tax rate is 25 percent, what is the pr oject's Year 0 net...
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