A current asset (defender) is being evaluated for potential replacement. it was purchased 4 years ago...
A current asset (defender) is being evaluated for potential replacement. it was purchased 4 years ago at a cost of 62,000. it has been depreciated as a MACRS (GDS) 5 year property class asset. The corresponding depreciation rates are 20%,32%,19.2%,11.52%,11.5%,and 5.76%. The present MV of the defender is 15,000. Its remaining useful life is estimated to be 4 years, but it will require additional repair worknow(a one time 3,700 expense) to provide continuing service equivalent to the challenger. the current effective income tax rate is 25% and the after tax MARR=18% per year. Based on an outsider viewpoint what is the after tax initial investment in the defender if it is kept(not replaced now)?
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A current asset (defender) is being evaluated for
potential replacement. it was purchased 4 years ago...
how we got the table Economic Life of a Defender (Existing Asset) It is desired to...
how we got the table
Economic Life of a Defender (Existing Asset) It is desired to determine how much longer a forklift truck should remain in service before it is replaced by the new truck (challenger) for which data were given in Example 9-4 and Table 9-2. The defender in this case is two years old, $7.500. It kept, its originally cost $19.500, and has a present realizable MV of $7,500 MVs and annual expenses are expected to be as...
A specialty concrete mixer used in construction was purchased for $300,000 7 years ago. It is...
A specialty concrete mixer used in construction was purchased for $300,000 7 years ago. It is MACRS-GDS 5-year property. Its annual O&M costs are $105,000. At the end of an 8-year planning horizon, the mixer will have a salvage value of $5,000. If the mixer is replaced, a new mixer will require an initial investment of $375,000, and at the end of the 8-year planning horizon, the new mixer will have a salvage value of $45,000. Its annual O&M cost...
A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present ...
A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $26,000 and replaced by a newer model having a purchase price of $42,500; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. If the before-tax MARR is 18%, when should the old assembly machine be replaced? Use the...
4] ROK decided to replace an existing asset with a newer model. Two years ago, the existing asset...
4] ROK decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and has been depreciated under MACRS using a 5-year recovery period (Le., 20%12.. Iomhliszt LLS2hS70%. The esisting asset can be sold for S25.000 after 2-year use. The new asset will cost $75,000 plus $5,000 for shipping and installation. The new asset will be depreciated under MACRS using a S-year recovery period. In addition, ROK expects that the new asset...
6. Award: 8.00 points A machine purchased three years ago for $305,000 has a current book...
6. Award: 8.00 points A machine purchased three years ago for $305,000 has a current book value using straight-line depreciation of $182,000; its operating expenses are $39,000 per year. A replacement machine would cost $229,000, have a useful life of nine years, and would require $12,000 per year in operating expenses. It has an expected salvage value of $65,000 after nine years. The current disposal value of the old machine is $77,000; if it is kept 9 more years, its...
A machine purchased three years ago for $300,000 has a current book value using straight-line depreciation...
A machine purchased three years ago for $300,000 has a current book value using straight-line depreciation of $177,000; its operating expenses are $31,000 per year. A replacement machine would cost $238,000, have a useful life of eleven years, and would require $13,000 per year in operating expenses. It has an expected salvage value of $67,000 after eleven years. The current disposal value of the old machine is $80,000; if it is kept 11 more years, its residual value would be...
A company currently uses a machine that was purchased 2 years ago. This machine is being...
A company currently uses a machine that was purchased 2 years ago. This machine is being depreciated on a straight-line basis and has 6 years of life remaining. Its current book value is $2,100 and it can be sold for S2,500 at this time. Thus, the annual Hepreciation expense is S2,100/6-S350 per year. If the old machine is not replaced, it could be sold for S500 at the end ofits useful life The company is offered a replacement machine which...
1. a. Young Brains is considering expanding its current operations by adding new trucks to its...
1. a. Young Brains is considering expanding its current operations by adding new trucks to its fleet. The company expects to increase revenues with this asset expansion project. The firm plans to depreciate the trucks over a 6-year economic life using MACRS and to sell the trucks after 6 years. The firm’s marginal tax rate is 34%. The following are estimates of the project’s incremental cash flows: The purchase price of the trucks is ₵495,000. Delivery cost of ₵5,000 will...
De Young Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber...
De Young Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $600,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but De Young can sell it now to a Halloween mask manufacturer for $180,000. The old machine is being depreciated by $120,000 per year for each year of...
De Young Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber...
De Young Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $550,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but De Young can sell it now to a Halloween mask manufacturer for $165,000. The old machine is being depreciated by $110,000 per year for each year of...
how we got the table
Economic Life of a Defender (Existing Asset) It is desired to determine how much longer a forklift truck should remain in service before it is replaced by the new truck (challenger) for which data were given in Example 9-4 and Table 9-2. The defender in this case is two years old, $7.500. It kept, its originally cost $19.500, and has a present realizable MV of $7,500 MVs and annual expenses are expected to be as...
A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $26,000 and replaced by a newer model having a purchase price of $42,500; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. If the before-tax MARR is 18%, when should the old assembly machine be replaced? Use the...
4] ROK decided to replace an existing asset with a newer model. Two years ago, the existing asset originally cost $30,000 and has been depreciated under MACRS using a 5-year recovery period (Le., 20%12.. Iomhliszt LLS2hS70%. The esisting asset can be sold for S25.000 after 2-year use. The new asset will cost $75,000 plus $5,000 for shipping and installation. The new asset will be depreciated under MACRS using a S-year recovery period. In addition, ROK expects that the new asset...
6. Award: 8.00 points A machine purchased three years ago for $305,000 has a current book value using straight-line depreciation of $182,000; its operating expenses are $39,000 per year. A replacement machine would cost $229,000, have a useful life of nine years, and would require $12,000 per year in operating expenses. It has an expected salvage value of $65,000 after nine years. The current disposal value of the old machine is $77,000; if it is kept 9 more years, its...
A company currently uses a machine that was purchased 2 years ago. This machine is being depreciated on a straight-line basis and has 6 years of life remaining. Its current book value is $2,100 and it can be sold for S2,500 at this time. Thus, the annual Hepreciation expense is S2,100/6-S350 per year. If the old machine is not replaced, it could be sold for S500 at the end ofits useful life The company is offered a replacement machine which...
De Young Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $600,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but De Young can sell it now to a Halloween mask manufacturer for $180,000. The old machine is being depreciated by $120,000 per year for each year of...
De Young Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $550,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but De Young can sell it now to a Halloween mask manufacturer for $165,000. The old machine is being depreciated by $110,000 per year for each year of...
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