Solution
Computation of Annual Depreciation Expense | ||||
Year | Beginning Book Value | Annual depr. (40% of Book value) | Accumulated Depreciation at Year End | Ending Book Value |
1 | $ 274,000 | $ 109,600 | $ 109,600 | $ 164,400 |
2 | $ 164,400 | $ 65,760 | $ 175,360 | $ 98,640 |
3 | $ 98,640 | $ 39,456 | $ 214,816 | $ 59,184 |
4 | $ 59,184 | $ 23,674 | $ 238,490 | $ 35,510 |
5 | $ 35,510 | $ 35,510 | $ 274,000 | $ 0 |
.
Year | Net Income | Depreciation | Net Cash Flow | Cumulative Net Cash inflow (outflow) |
0 | $ (274,000) | $ (274,000) | ||
1 | $ 23,500 | $ 109,600 | $ 133,100 | $ (140,900) |
2 | $ 35,000 | $ 65,760 | $ 100,760 | $ (40,140) |
3 | $ 74,000 | $ 39,456 | $ 113,456 | $ 73,316 |
4 | $ 47,500 | $ 23,674 | $ 71,174 | $ 144,490 |
5 | $ 132,000 | $ 35,510 | $ 167,510 | $ 312,000 |
Payback period | 2.354 Years |
.Working
The depreciation in year 5 will not be 40% of ending book value of year 4 but it will be equal to ending value of year 4 which would make the year 5 book value to be zero.
Payback occurs between year 2 and 3 | ||
Last negative cumulative cash flow Divided by | $ 40,140.00 | =0.354 |
Next year's cash flow | $ 113,456.00 |
A machine can be purchased for $274,000 and used for five years, ylelding the following net...
A machine can be purchased for $274,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five year life and a zero salvage value. $23,500 $35,000 $74,000 $47.500 132,000 Compute the machine's payback period (Ignore taxes). (Round payback period answer to 3 decimal places.) Ending Beginning Book Vale Annual Cash Flows Year Net income Depreciation Cumulative Cash Flow O S $ 274,000) (274,000) 23.500 35,000 74,000 47,500 32 000...
A machine can be purchased for $236,000 and used for five years, yielding the following net incomes. In projecting net incomes double-declining depreciation is applied using a five-year life and a zero salvage value. Net income Year 1 $15,000 Year 2 $50,000 Year 3 $72,000 Year 4 $37,500 Years $120,000 Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Beginning Book Value Computation of Annual Depreciation Expense Annual Dept. (40% Accumulated of Book Value)...
A machine can be purchased for $288,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied, using a five-year life and a zero salvage value. Year 1 $20,500 Year 2 $27,000 Year 3 $80,000 Year 4 $48,000 Year 5 $107,000 Net income Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Computation of Annual Depreciation Expense Annual Depr. (40% Accumulated of Book Value) Depreciation at...
A machine can be purchased for $300,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied, using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net income $ 21,500 $ 29,000 $ 60,000 $ 39,500 $ 132,000 Compute the machine’s payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Computation of Annual Depreciation Expense Year Beginning Book Value...
A machine can be purchased for $140,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied using a five-year life and a zero salvage value. Net income Year 1 $9,500 Year 2 $23,500 Year 3 $64,000 Year 4 $35,500 Year 5 $94,000 Compute the machine's payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places.) Year Net Income Depreciation Net...
A machine can be purchased for $228,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 $130,000 Net income $11,500 $32,000 $79,000 $56,500 Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Computation of Annual Depreciation Expense Beginning Book Value Annual Depr. (40% of Book Value)...
A machine can be purchased for $297.000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five-year life and a zero salvage value. Year 1 $15.500 Year 2 $42.000 Year 3 $50.000 Year 4 $41.500 Year 5 $110.000 Net income Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Answer is complete but not entirely correct. Ending Year Book Value Computation of Annual...
A machine can be purchased for $293,000 and used for five years, yielding the following net incomes. In projecting net incomes. double-declining depreciation is applied, using a five-year life and a zero salvage value Year 1 14,000 $26,000 Year 2 Year 3 Year 4 $43,500 Year 5 $112,000 Net income 1.78 points Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Answer is not complete Computation of Annual Depreciation Expense Beginning Annual Depr (40%...
A machine can be purchased for $230,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero salvage value. Net income Year 1 $15,600 Year 2 $38,600 Year 3 $106,000 Year 4 $58,300 Year 5 $154,400 Compute the machine's payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places.) Year Net Income Depreciation Net...
A machine can be purchased for $180,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied using a five-year life and a zero salvage value. Net income Year 1 $12,100 Year 2 $30,100 Year 3 $69,000 Year 4 $45,300 Year 5 $120,400 Compute the machine's payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places.) Year Net Income Depreciation Net...