Homework Answers
Notes:
- Depreciation on SL = (Cost Price - Salvage Value) / Number of Year = ($260,000 - $20,000) / 6 i.e. $40,000
- Be careful while reading numbers (with commas)
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An asset is expected to produce a net cash inflows of 70,000 per year for the...
.ATCF Analysis: (15 ptos) ACME Inc. is contemplating the purchase of a new caterpillar machine. The machine will co...
.ATCF Analysis: (15 ptos) ACME Inc. is contemplating the purchase of a new caterpillar machine. The machine will cost $180,000. Its market value at the end of five years is estimated as $40,000. The accounting department uses the MACRS GDS-3 years recovery period depreciate the equipment. The justification for this machine include $60,000 savings per year in labor and $30,000 savings per year in reduced material. Equipment life 5 years, Tax rate 40% MARR is 10%. Use this information to...
.ATCF Analysis: (15 ptos) ACME Inc. is contemplating the purchase of a new caterpillar machine. The machine will co...
.ATCF Analysis: (15 ptos) ACME Inc. is contemplating the purchase of a new caterpillar machine. The machine will cost $180,000. Its market value at the end of five years is estimated as $40,000. The accounting department uses the MACRS GDS-3 years recovery period depreciate the equipment. The justification for this machine include $60,000 savings per year in labor and $30,000 savings per year in reduced material. Equipment life 5 years, Tax rate 40% MARR is 10%. Use this information to...
6) (28 points) A company is considering a replacement for an aging machine that has been...
6) (28 points) A company is considering a replacement for an aging machine that has been fully depreciated for tax purposes. The new machine will have an initial cost of $400,000 and is expected to generate an income of $125,000 per year. Its estimated salvage value at the end of its useful life of 4 years will be $60,000. The new machine is a MACRS-GDS 3-year property for calculating depreciation deductions. The effective tax rate is 35%. a) (20 points)...
Problem no 1: An asset is purchased for $10, 000 with 50% equity and 50% debt....
Problem no 1: An asset is purchased for $10, 000 with 50% equity and 50% debt. The custom debt financing details are shown in the "principle" and "interest " columns. The company has elected to apply straight-line depreciation assuming no salvage value at the end of a 10-year life. Annual gross income is $8,000 and annual expenses plus upgrade expenses are $5,000. Both income and costs are subject to an inflation rate of 5%. The corporate combined federal and state...
1. An injection mokding machine can be purchased and installed for $80,000 It is in the...
1. An injection mokding machine can be purchased and installed for $80,000 It is in the seven-year GDS property class and is expected to be kept in servioe for eight years. It is believed that $12,000 can be obtained when the machine is disposed of at the end of year eight. The net annual value added (i.e, revenues less expenses) that can be attributed to this machine is constant over eight years and amounts to $15,000, An effective income tax...
A widget manufacturer has the options of purchasing thingamajigs at $0.25 each for its new line...
A widget manufacturer has the options of purchasing thingamajigs at $0.25 each for its new line of doohickeys or install a $1,200,000 press to make the thingamajigs in their plant. It has been calculated that the material and overhead costs would be $0.12 per thingamajig made. (a) If 800,000 thingamajigs per year are needed and the press is installed, what is the payback period? (b) The press would be depreciated by straight-line depreciation using a 15-year useful life and no...
Also find the After Tax Cash Flows(ATCF) and Net present value(NPV) and Rate of Return (IRR) for each method 11...
Also find the After Tax Cash Flows(ATCF) and Net
present value(NPV) and Rate of Return (IRR) for each method
11-31 A small used delivery van can be purchased for $20,000. At the end of its useful life (8 years), the van can be sold for $3000. Determine the PW of the depreciation schedule based on 15% interest using: (a) Straight-line depreciation (b) Double declining balance depreciation (c) 100% bonus depreciation (d) MACRS depreciation Year BTCF BTCF Purchase benefits- & salvage...
O'Malley Inc. purchased an asset costing $90,000. Annual operating cash inflows are expected to be $20,000...
O'Malley Inc. purchased an asset costing $90,000. Annual operating cash inflows are expected to be $20,000 each year for six years. No salvage value is expected at the end of the asset's life. Assuming O'Malley's cost of capital is 16 percent, what is the asset's net present value? (ignore income taxes) $(16,306) $30,000 $(5,600) $4,800
Objective This activity has the purpose of helping students use the Microsoft Excel software to compute...
Objective This activity has the purpose of helping students use the Microsoft Excel software to compute the after tax cash flow and perform a sensitivity analysis. (Objective 3) Student Instructions Read example 7-15 to be used to compute the after tax present worth. Retrieved from textbook example 7-15 Computing After Tax Present Worth of and Asset (Sullivan W., Wicks E., and Patrick C.), page 341 Certain new machinery when placed in service is estimated to cost $180,000. It is expected...
Corleone Inc. is considering adding some automatic equipment to its production facilities. An investment of $200,000...
Corleone Inc. is considering adding some automatic equipment to its production facilities. An investment of $200,000 will produce an initial annual benefit of $45,000, but the benefits are expected to decline by $2,500 per year, making second-year benefits $42,500, third-year benefits $40,000, and so forth. The firm uses straight-line depreciation, an 8-year useful life and no salvage value at the end of the 8 years. Corleone Inc.'s tax rate is 42%. Create and submit a table that contains the following...
.ATCF Analysis: (15 ptos) ACME Inc. is contemplating the purchase of a new caterpillar machine. The machine will cost $180,000. Its market value at the end of five years is estimated as $40,000. The accounting department uses the MACRS GDS-3 years recovery period depreciate the equipment. The justification for this machine include $60,000 savings per year in labor and $30,000 savings per year in reduced material. Equipment life 5 years, Tax rate 40% MARR is 10%. Use this information to...
.ATCF Analysis: (15 ptos) ACME Inc. is contemplating the purchase of a new caterpillar machine. The machine will cost $180,000. Its market value at the end of five years is estimated as $40,000. The accounting department uses the MACRS GDS-3 years recovery period depreciate the equipment. The justification for this machine include $60,000 savings per year in labor and $30,000 savings per year in reduced material. Equipment life 5 years, Tax rate 40% MARR is 10%. Use this information to...
6) (28 points) A company is considering a replacement for an aging machine that has been fully depreciated for tax purposes. The new machine will have an initial cost of $400,000 and is expected to generate an income of $125,000 per year. Its estimated salvage value at the end of its useful life of 4 years will be $60,000. The new machine is a MACRS-GDS 3-year property for calculating depreciation deductions. The effective tax rate is 35%. a) (20 points)...
Problem no 1: An asset is purchased for $10, 000 with 50% equity and 50% debt. The custom debt financing details are shown in the "principle" and "interest " columns. The company has elected to apply straight-line depreciation assuming no salvage value at the end of a 10-year life. Annual gross income is $8,000 and annual expenses plus upgrade expenses are $5,000. Both income and costs are subject to an inflation rate of 5%. The corporate combined federal and state...
1. An injection mokding machine can be purchased and installed for $80,000 It is in the seven-year GDS property class and is expected to be kept in servioe for eight years. It is believed that $12,000 can be obtained when the machine is disposed of at the end of year eight. The net annual value added (i.e, revenues less expenses) that can be attributed to this machine is constant over eight years and amounts to $15,000, An effective income tax...
Also find the After Tax Cash Flows(ATCF) and Net
present value(NPV) and Rate of Return (IRR) for each method
11-31 A small used delivery van can be purchased for $20,000. At the end of its useful life (8 years), the van can be sold for $3000. Determine the PW of the depreciation schedule based on 15% interest using: (a) Straight-line depreciation (b) Double declining balance depreciation (c) 100% bonus depreciation (d) MACRS depreciation Year BTCF BTCF Purchase benefits- & salvage...
O'Malley Inc. purchased an asset costing $90,000. Annual operating cash inflows are expected to be $20,000 each year for six years. No salvage value is expected at the end of the asset's life. Assuming O'Malley's cost of capital is 16 percent, what is the asset's net present value? (ignore income taxes) $(16,306) $30,000 $(5,600) $4,800
Objective This activity has the purpose of helping students use the Microsoft Excel software to compute the after tax cash flow and perform a sensitivity analysis. (Objective 3) Student Instructions Read example 7-15 to be used to compute the after tax present worth. Retrieved from textbook example 7-15 Computing After Tax Present Worth of and Asset (Sullivan W., Wicks E., and Patrick C.), page 341 Certain new machinery when placed in service is estimated to cost $180,000. It is expected...
Corleone Inc. is considering adding some automatic equipment to its production facilities. An investment of $200,000 will produce an initial annual benefit of $45,000, but the benefits are expected to decline by $2,500 per year, making second-year benefits $42,500, third-year benefits $40,000, and so forth. The firm uses straight-line depreciation, an 8-year useful life and no salvage value at the end of the 8 years. Corleone Inc.'s tax rate is 42%. Create and submit a table that contains the following...
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