5tseBookHintPrintferencesProblem 17.049: Calculate the after-tax AW of two alternativesA European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredients,while being economical. The two alternatives available have the following estimates:SystemFirst Cost, $CFBT, $ per YearLife, YearsA-150,00060,0003B-80,00020,0005Check my wThe company is in the 35% tax bracket and assumes classical straight line depreciation for alternative comparisons performed at anafter-tax minimum acceptable rate of return (MARR) of 8% per year. A salvage value of zero is used when depreciation is calculated;however, system B can be sold after 5 years for an estimated 8% of its first cost. System A has no anticipated salvage value. Determinewhich is more economical using an annual worth (AW) analysis worked by hand.The annual worth analysis for system A is determined to be $The annual worth analysis for system B is determined to be $System (Click to select) is selected.

Cost is the amount of money that is paid in the production process on rent, wages, interest, and…

Answered: A European candy manufacturing plant…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An equipment has a first cost of Php20,000 and has a salvage value of Php2,000 after 10 years. What is the depreciation after 3 years using declining balance method?
quipment associated with manufacturing small railcars had a first cost of $170,000 with an expected salvage value of $30,000 at the end of its 5-year life. The revenue was $630,000 in year 2, with operating expenses of $98,000. If the company’s effective tax rate was 36%, what would be the difference in taxes paid in year 2 if the depreciation method were straight line instead of Modified Accelerated Cost Recovery System (MACRS)? The MACRS depreciation rate for year 2 is 32%. The difference in taxes paid is determined to be $ .
A machine costs P7,000, last 8 years and has a salvage value at the end of life of ₱350. Determine the depreciation charge during the 4th year by using: straight line method, sum of the years digit method, and declining balancing method.
N7
An asset with a first cost of $13,000 is depreciated using the Modified Accelerated Cost recovery System (MACRS) over a 5-year period. The cash flow before taxes (CFBT) is estimated at $10,000 for the first 4 years and $5000 thereafter as long as the asset is retained. The effective tax rate is 33%, and the money is worth 11% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes? The present worth (PW) of CFBT is determined to be $ The present worth (PW) of CFAT is determined to be $ The difference between the two present worth (PW) values is determined to be $
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 company is going to buy a new machine for manufacturing its products. Three machines are available. Data is as follows: Money is worth 17% before taxes to the company. Which machine should be chosen? Use ROR
A brand new car costs ₱500,000 and the salvage value is 10% of the original cost after 20 years. Find the depreciation charge at the 8th year by SYDM
A factory purchased new heavy-duty equipment and intended to be used for 4 years. The information is given below. At MARR of 22% per year, determine the capital recovery (CR). Instruction: Enter a negative value for CR. First Cost, $ -275,000 Annual cost, $/year 5,000 Salvage value, $ 125,000 Life, years 4
A certain newly created company installed a 10,000kW electric generating plant at a cost of P430 per kW. The estimated life of the plant is 15 years. Salvage value is conservatively set at x% of the first cost. The interest on the sinking fund deposit is 3.5%. The accumulated depreciation after 10 years is P2,483,595. a. What percentage of first cost is set as salvage value? b. How much should the electric generating plant be priced at the end of 8 years? c. If the salvage value is increased by 2%, what is the book value after 10 years?
Identify the basic solution described by each event below: gross income, depreciation, operating expense, taxable income, income tax, or net operating profit after taxes.(a) A new machine had a first-year write-off of ₱10,500(b) A public corporation estimates that it will report a ₱−750,000 net profit on its annual income statement.(c) An asset with a book value of $8000 was retired and sold for ₱8450.(d) An over-the-counter software system will generate ₱420,000 in revenue this quarter.(e) An asset with a MACRS recovery period of 7 years has been owned for 10 years. It was just sold for ₱2750.(f ) The cost of goods sold in the past year was ₱3,680,200.(g) A convenience store collected ₱33,550 in lottery ticket sales last month. Based on winners holding these tickets, a rebate of ₱350 was sent to the manager.(h) An asset with a first cost of $65,000 was utilized on a new product line to increase sales by ₱150,000.(i) The cost to maintain equipment during the past year was ₱641,000.
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…

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