Homework Answers
|
Depreciation Schedule |
||||||||||||||||
|
Yaer |
beginnin balance |
Annual depreciation = beginning balance*depreciation rate |
year end balance = beginning balance-annual depreciation |
|||||||||||||
|
1 |
75000 |
16095 |
58905 |
|||||||||||||
|
2 |
58905 |
12641.013 |
46263.987 |
|||||||||||||
|
3 |
46263.987 |
9928.25161 |
36335.73539 |
|||||||||||||
|
4 |
36335.73539 |
7797.648815 |
28538.08658 |
|||||||||||||
|
5 |
28538.08658 |
6124.273379 |
22413.8132 |
|||||||||||||
|
6 |
22413.8132 |
4810.004312 |
17603.80888 |
|||||||||||||
|
7 |
17603.80888 |
3777.777387 |
13826.0315 |
|||||||||||||
|
8 |
13826.0315 |
2967.066359 |
10858.96514 |
|||||||||||||
|
9 |
10858.96514 |
2330.333919 |
8528.63122 |
|||||||||||||
|
10 |
8528.63122 |
1830.24426 |
6698.38696 |
|||||||||||||
|
11 |
6698.38696 |
1437.473842 |
5260.913118 |
|||||||||||||
|
12 |
5260.913118 |
1128.991955 |
4131.921163 |
|||||||||||||
|
13 |
4131.921163 |
886.7102816 |
3245.210882 |
|||||||||||||
|
14 |
3245.210882 |
696.4222552 |
2548.788626 |
|||||||||||||
|
15 |
2548.788626 |
546.9700392 |
2001.818587 |
|||||||||||||
|
1- |
Depreciation rate = 1-(scrapvalue/purchase price)^(1/n) |
1-(2000/75000)^(1/15) |
21.46% |
|||||||||||||
|
Year |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
13 |
14 |
15 |
|
Initial investment |
-75000 |
|||||||||||||||
|
revenue |
10000 |
10000 |
10000 |
10000 |
10000 |
10000 |
10000 |
10000 |
10000 |
10000 |
10000 |
10000 |
10000 |
10000 |
10000 |
|
|
less operating expense |
2500 |
2500 |
2500 |
2500 |
2500 |
2500 |
2500 |
2500 |
2500 |
2500 |
2500 |
2500 |
2500 |
2500 |
2500 |
|
|
less depreciation |
16095 |
12641.013 |
9928.25161 |
7797.648815 |
6124.273379 |
4810.004312 |
3777.777387 |
2967.066359 |
2330.333919 |
1830.24426 |
1437.473842 |
1128.991955 |
886.7102816 |
696.4222552 |
546.9700392 |
|
|
operating profit |
-8595 |
-5141.013 |
-2428.25161 |
-297.648815 |
1375.72662 |
2689.99569 |
3722.22261 |
4532.93364 |
5169.66608 |
5669.75574 |
6062.52616 |
6371.00804 |
6613.28972 |
6803.57774 |
6953.02996 |
|
|
less tax 30% |
-2578.5 |
-1542.3039 |
-728.475483 |
-89.2946444 |
412.717986 |
806.998706 |
1116.66678 |
1359.88009 |
1550.89982 |
1700.92672 |
1818.75785 |
1911.30241 |
1983.98692 |
2041.07332 |
2085.90899 |
|
|
after tax profit |
-6016.5 |
-3598.7091 |
-1699.77613 |
-208.35417 |
963.008635 |
1882.99698 |
2605.55583 |
3173.05355 |
3618.76626 |
3968.82902 |
4243.76831 |
4459.70563 |
4629.3028 |
4762.50442 |
4867.12097 |
|
|
add depreciation |
16095 |
12641.013 |
9928.25161 |
7797.648815 |
6124.273379 |
4810.004312 |
3777.777387 |
2967.066359 |
2330.333919 |
1830.24426 |
1437.473842 |
1128.991955 |
886.7102816 |
696.4222552 |
546.9700392 |
|
|
scrap value |
0 |
2000 |
||||||||||||||
|
net operating cash flow |
-75000 |
10078.5 |
9042.3039 |
8228.47548 |
7589.29464 |
7087.28201 |
6693.00129 |
6383.33322 |
6140.11991 |
5949.10018 |
5799.07328 |
5681.24215 |
5588.69759 |
5516.01308 |
5458.92668 |
7414.09101 |
|
present value of net operating cash flow = net operating cash flow/(1+r)^n r =5% |
-75000 |
9598.57143 |
8201.6362 |
7108.0665 |
6243.73149 |
5553.07091 |
4994.42061 |
4536.51574 |
4155.87484 |
3834.84302 |
3560.12794 |
3321.70462 |
3111.99594 |
2925.25951 |
2757.12892 |
3566.30454 |
|
Net present value = sum of present value of cash flow |
-1530.7478 |
Add Answer to:
An engineering company just bought a milling machine for $75,000. Its service life is 15 years,...
An engineering company just bought a milling machine for $75,000. Its service life is 15 years,...
An engineering company just bought a milling machine for $75,000. Its service life is 15 years, an afterwards its salvage value will be $2000. Services provided by the machine are expected to brin $10,000 in annual revenues, and operating costs are estimated at $2500 per year. Assume that th CCA rate is rate is 30%. Calculate the depreciation rate of this machine as well as the after-tax present worth of this investment. (20 marks) equal to the depreciation rate, the...
You are considering purchasing a CNC machine which costs $140,000. This machine will have an estimated service life of...
You are considering purchasing a CNC machine which costs $140,000. This machine will have an estimated service life of 9 years with a net after-tax salvage value of $14,000. Its annual after-tax operating and maintenance costs are estimated to be $52,000. To expect an 16% rate of return on investment, what would be the required minimum annual after-tax revenues? Click the icon to view the interest factors for discrete compounding when i= 16% per year. The required minimum annual after-tax...
You are considering purchasing a CNC machine which costs $150,000. This machine will have an estimated service life of...
You are considering purchasing a CNC machine which costs $150,000. This machine will have an estimated service life of 12 years with a net after-tax salvage value of $15,000. Its annual after-tax operating and maintenance costs are estimated to be $54,000. To expect an 16% rate of return on investment, what would be the required minimum annual after-tax revenues? 5 Click the icon to view the interest factors for discrete compounding when i = 16% per year. The required minimum...
XYZ Company’s machine was purchased 5 years ago for $55,000. It had an expected life of...
XYZ Company’s machine was purchased 5 years ago for $55,000. It had an expected life of 10 years when it was bought, and its remaining depreciation is $5,500 per year for each year of its remaining life and can be sold for $20,000 at the end of its useful life. A new machine can be purchased for $120,000, including the installation costs. During its 5-year life, it will reduce cash operating expenses by $30,000 per year. Sales revenue will not...
YZ Company’s machine was purchased 5 years ago for $55,000. It had an expected life of...
YZ Company’s machine was purchased 5 years ago for $55,000. It had an expected life of 10 years when it was bought, and its remaining depreciation is $5,500 per year for each year of its remaining life and can be sold for $20,000 at the end of its useful life. A new machine can be purchased for $120,000, including the installation costs. During its 5-year life, it will reduce cash operating expenses by $30,000 per year. Sales revenue will not...
You are considering purchasing a CNC machine which costs $130,000. This machine will have an estimated service life...
You are considering purchasing a CNC machine which costs $130,000. This machine will have an estimated service life of 10 years with a net aftier-tax salvage value of $13,000. Its annual after-tax operating and maintenance costs are estimated to be $60,000. To expect an 17 % rate of return on investment, what would be the required minimum annual after-tax revenues? Click the icon to view the interest factors for discrete compounding when /-17 % per year The required minimum annual...
Scenario 2: A metal fabrication company bought a new CNC machine for $600,000 in year 2014....
Scenario 2: A metal fabrication company bought a new CNC machine for $600,000 in year 2014. The machine has a 20-year MACRS life and will be depreciated using accelerated depreciation. Sales revenue for year 2014 was $862,000. Annual operating expenses for each year are $434,000, excluding capital expenditures and depreciation. (Note: Use the 2016 corporate tax rate schedule/table). 2A. What is the value of depreciation recorded in the accounting books/cash flow statement for year 2014? 2B. What is the net...
3. Company A purchases $200,000 of equipment in year 0. It decides to use straight-line depreciation...
3. Company A purchases $200,000 of equipment in year 0. It decides to use straight-line depreciation over the expected 20 yr life of the equipment. The interest rate is 16%. If its overall tax rate is 40%, what is the present worth of the after-tax depreciation recovery? $23,115 B. $23,315 C. $23,515 D. $23,715 A. 4 A. plan A B. Plan B C. Plan C D. Plan A or B 5. A machine costs $10,000 and can be depreciated over...
You are considering purchasing a CNC machine which costs $160,000. This machine will have an estimated service li...
You are considering purchasing a CNC machine which costs $160,000. This machine will have an estimated service life of 12 years with a net after-tax salvage value of $16,000. Its annual after-tax operating and maintenance costs are estimated to be $56,000. To expect an 16% rate of return on investment, what would be the required minimum annual after-tax revenues? Click the icon to view the interest factors for discrete compounding when i = 16% per year The required minimum annual...
The electronics company plans to replace the manually operated manufacturing machine with a new fully automated...
The electronics company plans to replace the manually operated manufacturing machine with a new fully automated machine. Use the following information to determine the cash flows and profitability of the replacement decision. Current situation • Current estimated wages of operators are 30,000 annually. By replacing, we can save these labour related costs. • Maintenance costs € 8,000 per year. • Waste related costs of € 10,000 per year • The machine currently in use was bought 5 years ago for...
An engineering company just bought a milling machine for $75,000. Its service life is 15 years, an afterwards its salvage value will be $2000. Services provided by the machine are expected to brin $10,000 in annual revenues, and operating costs are estimated at $2500 per year. Assume that th CCA rate is rate is 30%. Calculate the depreciation rate of this machine as well as the after-tax present worth of this investment. (20 marks) equal to the depreciation rate, the...
You are considering purchasing a CNC machine which costs $140,000. This machine will have an estimated service life of 9 years with a net after-tax salvage value of $14,000. Its annual after-tax operating and maintenance costs are estimated to be $52,000. To expect an 16% rate of return on investment, what would be the required minimum annual after-tax revenues? Click the icon to view the interest factors for discrete compounding when i= 16% per year. The required minimum annual after-tax...
You are considering purchasing a CNC machine which costs $150,000. This machine will have an estimated service life of 12 years with a net after-tax salvage value of $15,000. Its annual after-tax operating and maintenance costs are estimated to be $54,000. To expect an 16% rate of return on investment, what would be the required minimum annual after-tax revenues? 5 Click the icon to view the interest factors for discrete compounding when i = 16% per year. The required minimum...
You are considering purchasing a CNC machine which costs $130,000. This machine will have an estimated service life of 10 years with a net aftier-tax salvage value of $13,000. Its annual after-tax operating and maintenance costs are estimated to be $60,000. To expect an 17 % rate of return on investment, what would be the required minimum annual after-tax revenues? Click the icon to view the interest factors for discrete compounding when /-17 % per year The required minimum annual...
Scenario 2: A metal fabrication company bought a new CNC machine for $600,000 in year 2014. The machine has a 20-year MACRS life and will be depreciated using accelerated depreciation. Sales revenue for year 2014 was $862,000. Annual operating expenses for each year are $434,000, excluding capital expenditures and depreciation. (Note: Use the 2016 corporate tax rate schedule/table). 2A. What is the value of depreciation recorded in the accounting books/cash flow statement for year 2014? 2B. What is the net...
3. Company A purchases $200,000 of equipment in year 0. It decides to use straight-line depreciation over the expected 20 yr life of the equipment. The interest rate is 16%. If its overall tax rate is 40%, what is the present worth of the after-tax depreciation recovery? $23,115 B. $23,315 C. $23,515 D. $23,715 A. 4 A. plan A B. Plan B C. Plan C D. Plan A or B 5. A machine costs $10,000 and can be depreciated over...
You are considering purchasing a CNC machine which costs $160,000. This machine will have an estimated service life of 12 years with a net after-tax salvage value of $16,000. Its annual after-tax operating and maintenance costs are estimated to be $56,000. To expect an 16% rate of return on investment, what would be the required minimum annual after-tax revenues? Click the icon to view the interest factors for discrete compounding when i = 16% per year The required minimum annual...
Most questions answered within 3 hours.
-
Based on the range, which of the following sets of scores has
the greatest variability? 3,...
asked 38 minutes ago -
Ripples in a pond travel at a velocity of 3 m/s with one peak
passing a...
asked 28 minutes ago -
A man stands on the roof of a building of height 13.0 mm and
throws a...
asked 34 minutes ago -
The extent to which assets are financed by borrowed funds and
other liabilities is indicated by:...
asked 1 hour ago -
Explain in detail
Germany is the fifth largest economy
explain what goods and services Germany specializes...
asked 1 hour ago -
The density of platinum is 21.45 g/mL. If a cube of platinum
with a mass of...
asked 1 hour ago -
Accounts Receivable
Sales
A/R Posting
Extended Sales Invoice
Packing Slip
Compare invoice to packing slip 2...
asked 1 hour ago -
Michaella, age 23, is a full-time law student and is claimed by
her parents as a...
asked 1 hour ago -
Why are polymers not typically casted into products?
asked 2 hours ago -
When rolling a die 129 times, what is the probability of rolling
a 6 no more...
asked 2 hours ago -
4. A call option currently sells for $7.75. It has a strike
price of $85 and...
asked 2 hours ago -
1.
You need to prepare 10.0 liters of an acid aqueous solution with a
pH of...
asked 2 hours ago