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Hardware Corp. is planning to buy production machinery. This machinery's expected useful life is 5 years,...
Problem 2 (Ignore taxes for this problem) Bullock Prosthetics is planning to buy 3-D printing machinery...
Problem 2 (Ignore taxes for this problem) Bullock Prosthetics is planning to buy 3-D printing machinery costing $380,000. This machinery’s expected useful life is 5 years. They require a minimum rate of return of 8%, and have calculated the following data pertaining to the purchase and operation of this machinery: Year Estimated Annual Cash Inflows Estimated Annual Cash Outflows Depreciation 1 $ 90,000 $15,000 $60,000 2 $150,000 $45,000 $60,000 3 $230,000 $95,000 $60,000 4 $270,000 $110,000 $60,000 5 $300,000 $125,000...
Cost of new machinery $200,000 Machinery estimated useful life 10 years Estimated salvage value $0 Straight-line...
Cost of new machinery $200,000 Machinery estimated useful life 10 years Estimated salvage value $0 Straight-line depreciation Annual labor hours reduction 10,000 Annual operating costs reduction $4,000 Average hourly labor rate $5.50 Income tax rate 40% Discount rate 10% Part 1: Calculate the annual incremental income after taxes and the annual net cash flow for each year Part 2: Calculate the payback period Part 3: Calculate the rate of return on average investment Part 4: Calculate the net present value...
A company acquired machinery for $90,000. The machinery's estimated useful life is 8 years and estimated...
A company acquired machinery for $90,000. The machinery's estimated useful life is 8 years and estimated residual value is $10,000. Complete the following. (Round your answers to the nearest whole number.) Declining-Balance at Twice the Straight-Line Rate (DDB) Straight-Line Book Annual Book Annual Depreciation Value Depreciation Value At acquisition Year 1 Year 2 Year 3
A company acquired machinery for $90,000. The machinery's estimated useful life is 8 years and estimated...
A company acquired machinery for $90,000. The machinery's estimated useful life is 8 years and estimated residual value is $10,000. Complete the following. (Round your answers to the nearest whole number.) Declining-Balance at Twice the Straight-Line Rate (DDB) Straight-Line Annual Book Annual Book Depreciation Value Depreciation Value At acquisition Year 1 Year 2 Year 3
Triangle Corp is planning to buy a new computer for $750,000 with a useful life of...
Triangle Corp is planning to buy a new computer for $750,000 with a useful life of six years. At the end of six years, the system will have no value. Over the six years the system will save them $250,000 each year for the first three years and $100,000 each year for the last three years. a. What is the NPV of the project if Triangle Corp requires a return of 15%? b. What is the IRR for this project?...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000 investment in working capital. The machine has an expected useful life of 10 years and no salvage value. The annual cash inflows (before taxes) are estimated at $90,000 with annual cash outflows (before taxes) of $30,000. The company uses straight-line depreciation. Assume the federal income tax rate is 40%. The company's new accountant computed the net present value of the project using a minimum...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000 investment in working capital. The machine has an expected useful life of 10 years and no salvage value. The annual cash inflows (before taxes) are estimated at $90,000 with annual cash outflows (before taxes) of $30,000. The company uses straight-line depreciation. Assume the federal income tax rate is 40%. The company's new accountant computed the net present value of the project using a minimum...
Capital Budget Problem
The Gabriel Co. is considering a 7-year project that would require a cash outlay of $140,000 for machinery and an additional $30,000 for working capital that would be released at the end of the project. The equipment would be depreciated evenly over the 7 years and have a salvage value of $ 7,000 at the end of 7 years. The project would generate before tax annual cash inflows of $41,500. The tax rate is 20% and the company's discount rate...
Capital Budgeting Analysis: The MCSL Corp. is planning a new investment project which is expected to...
Capital Budgeting Analysis: The MCSL Corp. is planning a new investment project which is expected to yield cash inflows of $180,000 per year in Years 1 through 3, $225,000 per year in Years 4 through 7, and $185,000 in Years 8 through 10. This investment will cost the company $880,000 today (initial outlay). We assume that the firm's cost of capital is 7.8%. (1) Draw a time line to show the cash flows of the project. 2) Compute the project’s...
Windsor Corp. purchased machinery for $312,000 on May 1, 2020. It is estimated that it will have a useful life of 10 ye...
Windsor Corp. purchased machinery for $312,000 on May 1, 2020. It is estimated that it will have a useful life of 10 years, salvage value of $15,000, production of 237,600 units, and working hours of 25,000. During 2021, Windsor Corp. uses the machinery for 2,650 hours, and the machinery produces 27,540 units. From the information given, compute the depreciation charge for 2021 under each of the following methods. (Round intermediate calculations to 2 decimal places, e.g. 5.25 and final answers...
A company acquired machinery for $90,000. The machinery's estimated useful life is 8 years and estimated residual value is $10,000. Complete the following. (Round your answers to the nearest whole number.) Declining-Balance at Twice the Straight-Line Rate (DDB) Straight-Line Book Annual Book Annual Depreciation Value Depreciation Value At acquisition Year 1 Year 2 Year 3
A company acquired machinery for $90,000. The machinery's estimated useful life is 8 years and estimated residual value is $10,000. Complete the following. (Round your answers to the nearest whole number.) Declining-Balance at Twice the Straight-Line Rate (DDB) Straight-Line Annual Book Annual Book Depreciation Value Depreciation Value At acquisition Year 1 Year 2 Year 3
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000 investment in working capital. The machine has an expected useful life of 10 years and no salvage value. The annual cash inflows (before taxes) are estimated at $90,000 with annual cash outflows (before taxes) of $30,000. The company uses straight-line depreciation. Assume the federal income tax rate is 40%. The company's new accountant computed the net present value of the project using a minimum...
Slick Company is considering a capital project involving a $225,000 investment in machinery and a $45,000 investment in working capital. The machine has an expected useful life of 10 years and no salvage value. The annual cash inflows (before taxes) are estimated at $90,000 with annual cash outflows (before taxes) of $30,000. The company uses straight-line depreciation. Assume the federal income tax rate is 40%. The company's new accountant computed the net present value of the project using a minimum...
Windsor Corp. purchased machinery for $312,000 on May 1, 2020. It is estimated that it will have a useful life of 10 years, salvage value of $15,000, production of 237,600 units, and working hours of 25,000. During 2021, Windsor Corp. uses the machinery for 2,650 hours, and the machinery produces 27,540 units. From the information given, compute the depreciation charge for 2021 under each of the following methods. (Round intermediate calculations to 2 decimal places, e.g. 5.25 and final answers...
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