Assume that you made a large investment this year, and that you are choosing between straight...
Assume that you made a large investment this year, and that you are choosing between straight line and accelerated depreciation methods. Which will result in higher cash flows this year? a. Straight Line Depreciation
b. Accelerated Depreciation
c. Same
Homework Answers
Ans c. Same
There is no impact of depreciation on the cash flows as depreciation is added back in the net profit to find the net cash flow. So, cash flows remains the same irrespective of the depreciation charged.
Add Answer to:
Assume that you made a large investment this year, and that you
are choosing between straight...
Assume that you made a large investment this year, and that you are choosing between straight line and accelerated depre...
Assume that you made a large investment this year, and that you are choosing between straight line and accelerated depreciation methods. Which will result in higher Net Income this year? A.Straight Line Depreciation B.Accelerated Depreciation c. Same
3. Use the information in Table 1.2 to determine the items listed below for the Accelerated...
3. Use the information in Table 1.2 to determine the items listed below for the Accelerated Depreciation Method and for the Straight Line Depreciation Method. The company has 20,000 shares of stock. Item Revenue Costs Tax Rate (%) Depreciable Investment Depreciation Straight Line Depreciation-Accelerated (MACRS) Amount ($) Amount (%) 1,000,000 800,000 40 400,000 40,000 10 80,000 20 3.1 Use the Accelerated Depreciation method and determine: (a) Gross Profits (b) Net Profits (e) Taxes (d) Cash Flows (e) Net Profits/share 3.2...
does anyone know how to answer these questions? 1. (30% Marks) Use the information in the...
does anyone know how to answer these questions?
1. (30% Marks) Use the information in the table to determine the items listed below for the Accelerated Depreciation Method and for the Straight-line Depreciation Method. The company has 10,000 shares of stock. Item Amount($) Amount (%) Revenue 1,000,000 Costs 800,000 Tax Rate (96) 20 Depreciable Investment 500,000 Depreciation Straight Line 50,000 10 Depreciation-Accelerated (MACRS) 100,000 20 TD 1.1 Use the Accelerated Depreciation method and determine: (a) Gross Profits (b) Net Profits...
Which of the following statements is CORRECT? a. Under current laws and regulations, corporations must use...
Which of the following statements is CORRECT? a. Under current laws and regulations, corporations must use straight-line depreciation for all assets whose lives are 5 years or longer. b. Using accelerated depreciation rather than straight line would normally have no effect on a project's total projected cash flows but it would affect the timing of the cash flows and thus the NPV. c. Since depreciation is not a cash expense, it has no effect on cash flows and thus no...
All else equal, will the PPE turnover ratio of a firm that only uses straight-line depreciation...
All else equal, will the PPE turnover ratio of a firm that only uses straight-line depreciation methods be higher, lower, or the same as the PPE turnover ratio of a firm that only uses accelerated depreciation methods ? (Assume that the PPE is not fully depreciated when answering this question.)
If a company reports a large amount of net income on its income statement during a...
If a company reports a large amount of net income on its income statement during a year, the firm must have Select one: A. positive cash flow from orerating activities. B. positive free cash flow. C. Positive cash flow from financing activities. D. None of the above are correct. ing ic AOT a source of cash? Which of the following would be a result of changing from the straight-line to the accelerated (MACRS) method of depreciation? Select one: A. Iower...
A profitable company making earthmoving equipment is considering a research investment of $100K on equipment that...
A profitable company making earthmoving
equipment is considering a research investment of $100K on
equipment that will have a 5 year useful and $20K salvage value. If
the money is worth 10%, which one of the following methods of
depreciation would be preferable? a) Straight line b) Sum of years'
digits c) Double declining balance d) Modified accelerated cost
recovery system
A profitable company making earthmoving equipment is considering a research investment of $100K on equipment that will have a...
Choosing Between two Mutually Exclusive Projects Question 2: A company can cither invest in project A,...
Choosing Between two Mutually Exclusive Projects Question 2: A company can cither invest in project A, project B, or neither (the projects are mutually exclusive and the company has no other investment options). Project A requires an initial investment of $1,000,000 and provides cash flows of $300,000 a year for six years. The project will also return $200,000 in capital back to the company in year six. Project B requires a $375,000 investment and will have cash flows of $200,000...
Overland Corporation has gathered the following data on a proposed investment project: The company uses straight-line...
Overland Corporation has gathered the following data on a
proposed investment project:
The company uses straight-line depreciation on all equipment.
Assume cash flows occur uniformly throughout a year except for the
initial investment.
The accrual accounting rate of return on the investment is:
A. 10.00%
B. 16.67%
C. 36.67%
D. 26.67%
$150,000 $40,000 Investment required in equipment Annual cash inflows Salvage value of equipment... Life of the investment........ Required rate of return ............. $0 10 years 10%
The fact that generally accepted accounting principles allow companies flexibility in choosing between certain allocatio...
The fact that generally accepted accounting principles allow
companies flexibility in choosing between certain allocation
methods can make it difficult for a financial analyst to compare
periodic performance from firm to firm.
Suppose you were a financial analyst trying to compare the
performance of two companies. Company A uses the
double-declining-balance depreciation method. Company B uses the
straight-line method. You have the following information taken from
the 12/31/2021 year-end financial statements for Company
B:
Income Statement
Depreciation expense
$
12,500...
3. Use the information in Table 1.2 to determine the items listed below for the Accelerated Depreciation Method and for the Straight Line Depreciation Method. The company has 20,000 shares of stock. Item Revenue Costs Tax Rate (%) Depreciable Investment Depreciation Straight Line Depreciation-Accelerated (MACRS) Amount ($) Amount (%) 1,000,000 800,000 40 400,000 40,000 10 80,000 20 3.1 Use the Accelerated Depreciation method and determine: (a) Gross Profits (b) Net Profits (e) Taxes (d) Cash Flows (e) Net Profits/share 3.2...
does anyone know how to answer these questions?
1. (30% Marks) Use the information in the table to determine the items listed below for the Accelerated Depreciation Method and for the Straight-line Depreciation Method. The company has 10,000 shares of stock. Item Amount($) Amount (%) Revenue 1,000,000 Costs 800,000 Tax Rate (96) 20 Depreciable Investment 500,000 Depreciation Straight Line 50,000 10 Depreciation-Accelerated (MACRS) 100,000 20 TD 1.1 Use the Accelerated Depreciation method and determine: (a) Gross Profits (b) Net Profits...
If a company reports a large amount of net income on its income statement during a year, the firm must have Select one: A. positive cash flow from orerating activities. B. positive free cash flow. C. Positive cash flow from financing activities. D. None of the above are correct. ing ic AOT a source of cash? Which of the following would be a result of changing from the straight-line to the accelerated (MACRS) method of depreciation? Select one: A. Iower...
A profitable company making earthmoving
equipment is considering a research investment of $100K on
equipment that will have a 5 year useful and $20K salvage value. If
the money is worth 10%, which one of the following methods of
depreciation would be preferable? a) Straight line b) Sum of years'
digits c) Double declining balance d) Modified accelerated cost
recovery system
A profitable company making earthmoving equipment is considering a research investment of $100K on equipment that will have a...
Choosing Between two Mutually Exclusive Projects Question 2: A company can cither invest in project A, project B, or neither (the projects are mutually exclusive and the company has no other investment options). Project A requires an initial investment of $1,000,000 and provides cash flows of $300,000 a year for six years. The project will also return $200,000 in capital back to the company in year six. Project B requires a $375,000 investment and will have cash flows of $200,000...
Overland Corporation has gathered the following data on a
proposed investment project:
The company uses straight-line depreciation on all equipment.
Assume cash flows occur uniformly throughout a year except for the
initial investment.
The accrual accounting rate of return on the investment is:
A. 10.00%
B. 16.67%
C. 36.67%
D. 26.67%
$150,000 $40,000 Investment required in equipment Annual cash inflows Salvage value of equipment... Life of the investment........ Required rate of return ............. $0 10 years 10%
The fact that generally accepted accounting principles allow
companies flexibility in choosing between certain allocation
methods can make it difficult for a financial analyst to compare
periodic performance from firm to firm.
Suppose you were a financial analyst trying to compare the
performance of two companies. Company A uses the
double-declining-balance depreciation method. Company B uses the
straight-line method. You have the following information taken from
the 12/31/2021 year-end financial statements for Company
B:
Income Statement
Depreciation expense
$
12,500...
Most questions answered within 3 hours.
-
How would you train your employees to avoid risks of using
mobile devices?
asked 7 minutes ago -
Assume Kw = 1.01 ✕ 10−14
For pure water, we can calculate [H3O+ ] = [OH...
asked 1 hour ago -
Suppose that on a temperature scale X, water boils at 203.0°X
and freezes at -105.7°X. What...
asked 1 hour ago -
BaS crystallizes in a cubic unit cell with S2- ions on each
corner and each face....
asked 2 hours ago -
A. 0≤P(Oi)≤10≤P(Oi)≤1 for each i
B. P(Oi)≤0P(Oi)≤0
C. P(Oi)=1+P(OCi)P(Oi)=1+P(OiC)
D. P(Oi)≥1P(Oi)≥1
If an experiment consists of...
asked 3 hours ago -
A battery has an emf of 9.20V and an internal resistance of 1.20
ohm. a)What resistance...
asked 3 hours ago -
The area of an elastic circular loop decreases at a constant
rate, dA/dt = −6.60×10−3 m2/s...
asked 5 hours ago -
The denaturation of proteins can be described by the
equilibrium
F⇌U
where F and U represent...
asked 6 hours ago -
Please answer what the maximum and minimum force is, and the
angle on the ion is...
asked 6 hours ago -
implement a program that reads a number of rows and a symbol.
The program will draw...
asked 6 hours ago -
Assume that when adults with smartphones are randomly selected,
45% use them in meetings or classes....
asked 6 hours ago -
Determine the number of formula units of
Na2SO4 and moles of oxygen contained in 8.11
moles...
asked 6 hours ago