Homework Answers
EBDT per year = $25,000
Less: Depreciation = $45,000
EBT = - $20,000
Less: Tax (20,000 *0.40) = -$8000 (savings)
So, Operating cash flow = $25,000 - (-8,000)
After-tax Operating cash flow = $33,000
Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2...
Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45 32 25 18 3 15 19 18 14 4 7 12 12 12 5 12 9 9 6 5 9 8 7 9 7 8 4 6 9 6 10 6 11 4 Under MACRS, an asset which originally cost $100,000, incurred installation costs of $10,000, and has an estimated salvage value of $25,000, is being depreciated using a 5 - year normal...
Arial v 10 BBv CV A. L29 H J K 1 2 3 4 5 6...
Arial v 10 BBv CV A. L29 H J K 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 fx А B С D E F G I Goodfellow's Flower Shoppe purchased a new delivery van on January 1st. The van cost $45,000 and is expected to have a useful life of 100,000 miles, with a salvage value of $5,000 after that time. Calculate the depreciation for each of the next five years, assuming...
Problem 11-13 Replacement Analysis The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for...
Problem 11-13 Replacement Analysis The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $100,000. It had an expected life of 10 years when it was bought and its remaining depreciation is $10,000 per year for each year of its remaining life. As older flange-lippers are robust and useful machines, this one can be sold for $20,000 at the end of its useful life. A new high-efficiency digital-controlled flange-lipper can be purchased for $150,000, including installation costs. During...
9) Investment A: Year: 0 Cash flow: $14,000 1 2 3 $6000 $6000 $6000 4 $6000...
9) Investment A: Year: 0 Cash flow: $14,000 1 2 3 $6000 $6000 $6000 4 $6000 5 $6000 Investment B: Year: 0 Cash flow: $15,000 1 2 3 4 5 $7000 $7000 $7000 $7000 $7000 Investment C: 0 Cash flow: $18,000 Year: 1 $12,000 2 $2000 3 $2000 4 $2000 5 $2000 The cash flows for three projects are shown above. The cost of capital is 9.5%. If an investor decided to take projects with a payback period two years...
Question 12 5 pts Elsinore Tech is considering the purchase of a new brewing machine to...
Question 12 5 pts Elsinore Tech is considering the purchase of a new brewing machine to replace an existing one. The old machine was purchases 3 years ago at a cost of $30,000, and was being depreciated using straight-line depreciation over six years to a SV of 0. The current market value of the old machine is $20,000. The new machine falls into the MACRS 5-year class, has an estimated life of 5 years, it costs $100,000, and Tech plans...
QUESTION 38 5 3 years Use the following tables to answer the question below: Lonestar Corporation...
QUESTION 38 5 3 years Use the following tables to answer the question below: Lonestar Corporation purchased a new truck for $45,000. Once the vehicle is taken out of service, they expect for it to be able to be sold for $15,000. What is the depreciable value? Property class (recovery period) Definition Research equipment and certain special tools 5 years Computers, printers, copiers, duplicating equipment, cars, light-duty trucks, qualified technological equipment, and similar assets Office furniture, fixtures, most manufacturing equipment,...
Question 14 5 pts Elsinore Tech is considering the purchase of a new brewing machine to...
Question 14 5 pts Elsinore Tech is considering the purchase of a new brewing machine to replace an existing one. The old machine was purchases 3 years ago at a cost of $30,000, and was being depreciated using straight-line depreciation over six years to a SV of O. The current market value of the old machine is $20,000. The new machine falls into the MACRS 5-year class, has an estimated life of 5 years, it costs $100,000, and Tech plans...
LO3 Year A 0 ($60) 1 $18 2 $32 3 $8 4 $2 5 $9 6...
LO3 Year A 0 ($60) 1 $18 2 $32 3 $8 4 $2 5 $9 6 $3 WACC = 7.00% Given the information in the table, what is project A's MIRR?
Problem 2-6 (Algo) Accounting cycle [LO2-3, 2-4, 2-5, 2-6, 2-7, 2-8] The general ledger of the...
Problem 2-6 (Algo) Accounting cycle [LO2-3, 2-4, 2-5, 2-6, 2-7,
2-8]
The general ledger of the Karlin Company, a consulting company,
at January 1, 2021, contained the following account balances:
Account Title
Debits
Credits
Cash
28,100
Accounts receivable
19,000
Equipment
33,000
Accumulated depreciation
9,900
Salaries payable
10,500
Common stock
50,000
Retained earnings
9,700
Total
80,100
80,100
The following is a summary of the transactions for the year:
Service revenue, $138,000, of which $41,400 was on account and
the balance...
P11–22 Terminal cash flow: Replacement decision Russell Industries is considering replacing a fully depreciated machine that...
P11–22 Terminal cash flow: Replacement decision Russell Industries is considering replacing a fully depreciated machine that has a remaining useful life of 10 years with a newer, more sophisticated machine. The new machine will cost $200,000 and will require $30,000 in installation costs. It will be depreciated under MACRS, using a 5-year recovery period (see Table 4.2 for the applicable depreciation percentages). A $25,000 increase in net working capital will be required to support the new machine. The firm’s managers...
Arial v 10 BBv CV A. L29 H J K 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 fx А B С D E F G I Goodfellow's Flower Shoppe purchased a new delivery van on January 1st. The van cost $45,000 and is expected to have a useful life of 100,000 miles, with a salvage value of $5,000 after that time. Calculate the depreciation for each of the next five years, assuming...
Problem 11-13 Replacement Analysis The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $100,000. It had an expected life of 10 years when it was bought and its remaining depreciation is $10,000 per year for each year of its remaining life. As older flange-lippers are robust and useful machines, this one can be sold for $20,000 at the end of its useful life. A new high-efficiency digital-controlled flange-lipper can be purchased for $150,000, including installation costs. During...
9) Investment A: Year: 0 Cash flow: $14,000 1 2 3 $6000 $6000 $6000 4 $6000 5 $6000 Investment B: Year: 0 Cash flow: $15,000 1 2 3 4 5 $7000 $7000 $7000 $7000 $7000 Investment C: 0 Cash flow: $18,000 Year: 1 $12,000 2 $2000 3 $2000 4 $2000 5 $2000 The cash flows for three projects are shown above. The cost of capital is 9.5%. If an investor decided to take projects with a payback period two years...
Question 12 5 pts Elsinore Tech is considering the purchase of a new brewing machine to replace an existing one. The old machine was purchases 3 years ago at a cost of $30,000, and was being depreciated using straight-line depreciation over six years to a SV of 0. The current market value of the old machine is $20,000. The new machine falls into the MACRS 5-year class, has an estimated life of 5 years, it costs $100,000, and Tech plans...
QUESTION 38 5 3 years Use the following tables to answer the question below: Lonestar Corporation purchased a new truck for $45,000. Once the vehicle is taken out of service, they expect for it to be able to be sold for $15,000. What is the depreciable value? Property class (recovery period) Definition Research equipment and certain special tools 5 years Computers, printers, copiers, duplicating equipment, cars, light-duty trucks, qualified technological equipment, and similar assets Office furniture, fixtures, most manufacturing equipment,...
Question 14 5 pts Elsinore Tech is considering the purchase of a new brewing machine to replace an existing one. The old machine was purchases 3 years ago at a cost of $30,000, and was being depreciated using straight-line depreciation over six years to a SV of O. The current market value of the old machine is $20,000. The new machine falls into the MACRS 5-year class, has an estimated life of 5 years, it costs $100,000, and Tech plans...
Problem 2-6 (Algo) Accounting cycle [LO2-3, 2-4, 2-5, 2-6, 2-7,
2-8]
The general ledger of the Karlin Company, a consulting company,
at January 1, 2021, contained the following account balances:
Account Title
Debits
Credits
Cash
28,100
Accounts receivable
19,000
Equipment
33,000
Accumulated depreciation
9,900
Salaries payable
10,500
Common stock
50,000
Retained earnings
9,700
Total
80,100
80,100
The following is a summary of the transactions for the year:
Service revenue, $138,000, of which $41,400 was on account and
the balance...
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