Homework Answers
| A. $33,000 | ||
| Depreciation expense = (Original cost - Salvage value) ÷ Useful life | ||
| ($200,000 - $0) ÷ 4 years = $50,000 per year | ||
| Annual Sales | $520,000 | |
| Annual cash operating expenses | $360,000 | |
| Depreciation | $50,000 | |
| Income before tax | $110,000 | |
| Tax (30%) | $33,000 | |
Add Answer to:
Tax rate Expected life of the project Investment required in equipment Salvage value of equipment. Annual...
Prudencio Corporation has provided the following information concerning a capital budgeting project: After-tax discount rate 13...
Prudencio Corporation has provided the following information concerning a capital budgeting project: After-tax discount rate 13 % Tax rate 30 % Expected life of the project 4 Investment required in equipment $ 160,000 Salvage value of equipment $ 0 Annual sales $ 400,000 Annual cash operating expenses $ 290,000 One-time renovation expense in year 3 $ 40,000 The company uses straight-line depreciation on all equipment. Assume cash flows occur at the end of the year except for the initial investments....
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click...
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables. Investment required in equipment $ 164,000 Salvage value of equipment $ 0 Working capital requirement $ 22,000 Annual sales $ 630,000 Annual cash operating expenses $ 487,000 One-time renovation expense in year 3 $ 50,000 The expected life of the project is 4 years. The income tax rate is 30%. The...
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click...
The following information concerning a proposed capital budgeting project has been provided by Jochum Corporation: Click here to view Exhibit 13B-1 to determine the appropriate discount factor(s) using tables. Investment required in equipment $ 184,000 Salvage value of equipment $ 0 Working capital requirement $ 32,000 Annual sales $ 650,000 Annual cash operating expenses $ 470,000 One-time renovation expense in year 3 $ 70,000 The expected life of the project is 4 years. The income tax rate is 30%. The...
Correll Corporation is considering a capital budgeting project that would require investing $254,000 in equipment with...
Correll Corporation is considering a capital budgeting project that would require investing $254,000 in equipment with an expected life of 4 years and zero salvage value. Annual incremental sales would be $605,000 and annual incremental cash operating expenses would be $441,000. The company’s income tax rate is 30% and its after-tax discount rate is 15%. The company uses straight-line depreciation. Assume cash flows occur at the end of the year except for the initial investments. The company takes income taxes...
Gaston Company is considering a capital budgeting project that would require a $2,600,000 investment in equipment...
Gaston Company is considering a capital budgeting project that would require a $2,600,000 investment in equipment with a useful life of five years and no salvage value. The company's tax rate is 30% and its after-tax cost of capital is 13%. It uses the straight-line depreciation method for financial reporting and tax purposes. The project would provide net operating income each year for five years as follows: $3,300,000 1,690,000 1,610,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and...
Gaston Company is considering a capital budgeting project that would require a $3,300,000 investment in equipment w...
Gaston Company is considering a capital budgeting project that would require a $3,300,000 investment in equipment with a useful life of five years and no salvage value. The company's tax rate is 30% and its after-tax cost of capital is 12%. It uses the straight-line depreciation method for financial reporting and tax purposes. The project would provide net operating income each year for five years as follows: $3,400,000 1,600,000 1,800,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising,, salaries, and...
Oriental Corporation has gathered the following data on a proposed investment project: Investment in depreciable equipment...
Oriental Corporation has gathered the following data on a proposed investment project: Investment in depreciable equipment Annual net cash flows Life of the equipment Salvage value Discount rate $200,000 $ 50,000 10 years 10% The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The simple rate of return on the investment would be: Multiple Choice o • o
A project with a life of 8 years is expected to provide annual sales of $360,000...
A project with a life of 8 years is expected to provide annual sales of $360,000 and costs of $253,000. The project will require an investment in equipment of $640,000, which will be depreciated on a straight-line method over the life of the project. You feel that both sales and costs are accurate to +/-15 percent. The tax rate is 40 percent. What is the annual operating cash flow for the best-case scenario?
Graziano Corporation (GC) is considering a project to purchase new equipment. The equipment would be depreciated...
Graziano Corporation (GC) is considering a project to purchase new equipment. The equipment would be depreciated by the straight-line method over its 3-year life and would have a zero-salvage value. The project requires an investment of $6,000 today on net working capital. Revenues and other operating costs are expected to be constant over the project's 3-year life. However, this project would compete with other company’s products and would reduce its pre-tax annual cash flows of $5,000 per year. The investment...
Reynold company is considering an investment of $130,000 in new equipment. The new equipment is expected...
Reynold company is considering an investment of $130,000 in new equipment. The new equipment is expected to last 5 years. It will have zero salvage value at the end of its useful life. Reynolds uses the straight-line method of depreciation for accounting purposes. The expected annual revenues and costs of the new product that will be product from the investment are: Sales revenue $200,000 Less: Costs and Expenses 180,000 Income before income taxes $ 20,000 Income tax expense 7,000 Net...
Gaston Company is considering a capital budgeting project that would require a $2,600,000 investment in equipment with a useful life of five years and no salvage value. The company's tax rate is 30% and its after-tax cost of capital is 13%. It uses the straight-line depreciation method for financial reporting and tax purposes. The project would provide net operating income each year for five years as follows: $3,300,000 1,690,000 1,610,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising, salaries, and...
Gaston Company is considering a capital budgeting project that would require a $3,300,000 investment in equipment with a useful life of five years and no salvage value. The company's tax rate is 30% and its after-tax cost of capital is 12%. It uses the straight-line depreciation method for financial reporting and tax purposes. The project would provide net operating income each year for five years as follows: $3,400,000 1,600,000 1,800,000 Sales Variable expenses Contribution margin Fixed expenses: Advertising,, salaries, and...
Oriental Corporation has gathered the following data on a proposed investment project: Investment in depreciable equipment Annual net cash flows Life of the equipment Salvage value Discount rate $200,000 $ 50,000 10 years 10% The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. The simple rate of return on the investment would be: Multiple Choice o • o
Most questions answered within 3 hours.
-
The Question: Cryptography is behind the scenes
of much of the security of the internet. These...
asked 19 minutes ago -
Important Information to answer the question:
Scale Solar Power Energy
The average price of a 4KW...
asked 1 hour ago -
Lowell Corp. sells $100,000 of bonds to private investors. The
bonds are due in five years,...
asked 2 hours ago -
3) Do you believe that Disney’s
acquisition-based growth strategy is sustainable?
4) Which competencies support this...
asked 2 hours ago -
Rank the following three stocks by their total risk level highest
to lowest night writer has...
asked 3 hours ago -
A local
electronic company primarily manufactures four highly technical
telecommunication products. Each product must be processed...
asked 4 hours ago -
•Describe the basic structure of collagen monomers •Explain how
amino acid composition of collagen contributes to...
asked 6 hours ago -
Compute the sample correlation coefficient
r for each of the following data sets.
(Use 3 decimal...
asked 6 hours ago -
5a. What are the advantages and disadvantages of Proxy ARP?
b. What is the TTL field...
asked 6 hours ago -
An ice cube (density = 900[kg/m3]) with a side length of
2.54[cm] is held by a...
asked 8 hours ago -
would you say that leaders in the international context are born
or made? That is, can...
asked 8 hours ago -
Instructions
Read the Digital Trends article "Solid state drives are speedier
than hard disk drives. Are...
asked 8 hours ago