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- An investment of $1.000.000 will be included in the 7-year MACRS class for depreciation. It would also require an additional $150,000 to invest in inventory and would add $50,000 to accounts payable. Will generate $400000 in revenue and $150000 in cash expenses annually. The tax rate is 21 per cent. What are the incremental cash flows for years 0, 1, 7 and 8?Determine whether the following contract described below is worthwhile ofundertaking after taxes if at the end of the 3-year of ownership the contract, you expect to sellboth depreciable equipment and land. Use present worth analysis under MARR = 8% andeffective tax rate.A chemical plant worth P 110M has an estimated life of 6 years and a projected scrap value of P 10M. after 3 years of operation an explosion made it a total loss. How much money would have to be raised to put up a new plant costing P 150M, if depreciation reserved had been maintained during its 3 years of operation by Straight Line method?
- A factory equipment has an initial cost of P200,000,00. It salvage value after 10 years is P20,000,00. As a percentage of the initial cost, what is the straight line depreciation rate of the equipment?A reactor of special design un the major item of equipment in a small chemical plant The initial cost of a Completely installed reactor is $ 60000 to the salvage value of the end of the useful life is estimated to be $ 10000. The total annual expenses for the plant are $100000. Excluding depreciation costs for the reactor. How many years of useful life should de estimated for the reactor if 12% of the total annual expenses for the Plant are due to the cost for reactor depreciation?Peachtree Construction Company, a highway contractor, is considering the purchase of a new trench excavator that costs 300000 and can dig a 3-foot-wide trench at the rate of 16 feet per hour. The contractor gets paid according to the usage of the equipment, 100 per hour. The expected average annual usage is 500 hours, and maintenance and operating costs will be 10 per hour. The contractor will depreciate the equipment by using a five-year MACRS, units-of-production method. At the end of five years, the excavator will be sold for 100000. Assuming the contractor’s marginal tax rate is 25% per year, determine the annual after-tax cash flow. In excel.
- An asset with a fixed investment cost of $90,000 is depreciated over an 8-year period. It is expected to have Sg = $30,000. MARR = 12% (My answers approximate to the nearest dollar) Using the Double DB method, what is D7? Within $10 of 5049 3365 8009 2670 4004 None of the aboveAn equipment costs P10,000 with a salvage value of P500 at the end of 10 years. Calculate the annual depreciation cost by sinking fund method at 4% interest. A. P791.26 B. P950.00 C. P971.12 D. P845.32A tractor for over-the-road hauling is to be purchased by AgriGrow for $80,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $3,800. Transportation cost savings are expected to be $140,000 per year; however, the cost of drivers is expected to be $53,000 per year, and operating expenses are expected to be $47,000 per year, including fuel, maintenance, insurance, and the like. The company's marginal tax rate is 25 percent, and MARR is 10 percent on after-tax cash flows. Suppose that, to AgriGrow's surprise, they actually dispose of the tractor at the end of the fourth tax year for $5,800. Develop tables using a spreadsheet to determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR after only 4 years. Click here to access the TVM Factor Table Calculator Part a Use straight-line depreciation (no half-year convention). End of Year ATCF 0 1 2 3 st 4 $ $ $ $ GA $ I After-tax PW: $ After-tax AW: $ For dollar amounts, carry all…
- 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…8. Saudi Post can sell envelopes for $0.2 per envelope. These envelopes are made using machines that cost $100,000 and have no salvage value at the end of 10 years. The equipment's annual operating costs will be $7,000 per year plus $0.11 per envelope produced. MARR is 12%lyear. Determine the minimum number of envelopes that Saudi Post must produce to breakeven. (select the closest answer) a. 196,649 b. 54,885 c. 274,427 d. 315,964D 0 P 2,020 0 2,000 0 8 700 1,560 7,413 1 2 8.840 1 P22,533 e with the = should be cost of only ROR on additional investment on D Solution Untreated Pole Annual costs: Depreciation - Machine D is economical than Machine B, choose Machine D. teample y (7-4) An untreated electric wooden pole that will last 10 years under certain soil condition costs P1,200. If a treated pole will last for 20 years, what is the maximum justifiable amount that can be paid for the treated pole, if the maximum return on investment is 12%? Consider annual taxes and insurance amount to be 1% of first cost. (ME Board Problem - Oct. 1988) P1,200 F/A, 12%, 10 -P13,695)(100) P52,000-P30,000 = 18.47> 17% P1,200 17.5487 -= P 68.38