18. A manufacturing company is purchasing a new quality monitoring system for itsmanufacturing facility. Table 1 records the relevant cost items for this purchase. The operatingexpenses for the new quality monitoring system is Usd 10,000 per year, and a useful life of thesystem is expected to be five years. The salvage value (SV) for depreciation purposes is equalto twenty five percent of the hardware cost. |Cost ItemHardwareTrainingInstallationi.ii.Jfour years.Table 1: Relevant cost valueCost (USD)120,00014,00014,000Find the book value (BV) of the system at the end of year three if thestraight line (SL) depreciation method is used.Suppose the after depreciating the system for two years with straight linethe method, the firm decides to switch to the double declining balance(DDB) depreciation method for the remainders of the system's life (theremaining three years). Find the system's book value (BV) at the end of

The objective of the question is to calculate the book value of the quality monitoring system at the…

Answered: 18. A manufacturing company is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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280 View Policies Current Attempt in Progress Carla Vista Company took a physical inventory on December 31 and determined that goods costing $236,000 were on hand. Not included in the physical count were $29,500 of goods purchased from Pelzer Corporation, FOB, shipping point, and $25,960 of goods sold to Alvarez Company for $35,400, FOB destination. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. What amount should Carla Vista report as its December 31 inventory? Ending inventory Save for Later LA eTextbook and Media A $ 2 MAR 1 Attempts: 0 of 3 used Submit Answer
Consider a project to supply Detroit with 27,000 tons of machine screws annually for automobile production. You will need an initial $4,600,000 investment in threading equipment to get the project started; the project will last for 5 years. The accounting department estimates that annual fixed costs will be $1,100,000 and that variable costs should be $205 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the 5-year project life. It also estimates a salvage value of $475,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $308 per ton. The engineering department estimates you will need an initial net working capital investment of $440,000. You require a return of 12 percent and face a tax rate of 23 percent on this project. a. Suppose you’re confident about your own projections, but you’re a little unsure about Detroit’s actual machine screw…
7. An asset has an initial cost of $80,000, a salvage value of $10,000, and a depreciation life of 8 years. a) Determine the book value for year 3 using straight-line depreciation. b) Determine the depreciation for year 3 using double declining balance depreciation. Determine the equivalent annual capital recovery_plus a return of 10% for year 3, assuming double declining balance depreciation. c)
You are evaluating two different silicon wafer milling machines. The Techron I costs $270,000, has a 3-year life, and has pretax operating costs of $73,000 per year. The Techron II costs $470,000, has a 5-year life, and has pretax operating costs of $46,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $50,000. If your tax rate is 24 percent and your discount rate is 10 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Techron I Techron II
A furniture company buys a forest to obtain wood for manufacturing furniture. The related costs to theforest are:Cost of buying the forest = $730,000,000Wood expected to be extracted = 400,000 tonCost of restoration of the forest = $120,000,000Residual/salvage value = $233,000,000Trees cut in year 1 = 107,000 tonsTrees cut in year 2 = 89,000 tonsCompute the depletion rate and depletion charge for the first 2 years.
2- The marginal cost for year t is computed as SV, - SV-1+SV¢ • i+ Cost, where SV denotes salvage value. a) TRUE b) FALSE 3- Replacement rule implies replacing the existing asset when the marginal cost of the existing asset is more than the marginal cost of the new asset. a) TRUE b) FALSE 4- Depreciation recapture occurs when the market value of an asset is greater than the book value. a) TRUE b) FALSE 5- Year 1 SV O&M 15,000 1000 12,000 1500 9.000 2 3 2000 The table above lists salve value (SV) and operating and mainteriance (O&M) cost of an asset through 3 years with the initial cost of $20,000. Given MARR is 10%, which of the statements is correct (choose the closest answer)? a) The marginal cost at year 2 is $6,000 and the annual cost (EUAC) through year two is $6,500 b) The marginal cost at year 2 is $6,000 and the annual cost (EUAC) through year two is $7,048 c) The marginal cost at year 2 is $6,500 and the annual cost (EUAC) through year two is $7,048 d) The marginal cost at…
Eng. Economics. Your small consulting company is evaluating a circuit board testingmachine. The device costs $35,000, and the maker estimates that itwill have a salvage value of $6,000 after 5 years of use. Determinethe annual depreciation.
2-14. A tennis racquet manufacturer is negotiating a lease on land to build a manufacturing plant. The price (0.1)D per charged will be determined by p = $450 94301 0:19 tennis racquet. The manufacturer faces variable costs of $25 per tennis racquet. Fixed costs of manufacturing are currently $25,000, in addition to the value of the lease being negotiated. (2.2) and 2011 a. For this situation, determine the optimal monthly 19D sales volume for this product. How To Tu We oil 202 snudism olditud moo b. How high can the lease be in order for the firm to bill make a positive profit? - slicmar
1b. A machine was purchased 4 years ago for $50,000. The depreciation amount each year was $10,000. The firm that owns the machine no longer has a need for it, but a buyer is now willing to pay $60,000 for it because machines of this type are no longer available. What will be the gain (or loss) on this transaction? Edit Format Table
A crane rental company has acquired a new heavy-duty crane for $310,000. The company calculates depreciation on this equipment on the basis of number of rentals per year, and the salvage value of the crane at the end of its 11-year life is $40,000, if the crane is rented an average of 115 days per year, what is the depreciation rate per rental? The depreciation is S per day of rent. (Round to the nearest dollar
12. A recapping plant is planning to acquire a new diesel engine set to replace its present unit which they run during power interruptions. The new diesel set would cost $135,000 with a five years life and zero residual value. Annual operating cost would be $150,000. On the other hand, the present generating set has a remaining life of 5 years. Its present value is $7,500 but has a zero residual value after 5 years. Annual operating costs is placed at $187,500. If MARR=10%, which is more profitable – to buy the new generator set or retain the present set? Calculate the difference in annual costs between the two alternatives. mpanu ic conridering two alternatives with regards to an eguinment which it needs The

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