any, whose earnings put them in the 46% tax bracket, is considering purchasing a piece of equipment for $25,000. The equipment has a straight line depreciation (=25000/4 per year), a useful life of 4 years and a salvage value of $5000 (taxes already deducted, you don't have to calc that). It is estimated that the equipment will increase the company's earnings by $8000 for each of the 4 years. Should the equipment be purchased? Use an interest rate of 10%

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Equivalent annual savings is the cost of operating and maintaining an asset annually. It is also…

Q: McPherson Company must purchase a new milling machine. The purchase price is $50,000, including…

A:

Q: Multiple Choice

A: $265,600 Explanation: Non-cash expenditures like depreciation and amortization are excluded from…

Q: Daily Enterprises is purchasing a $10.5 million machine. It will cost $55,000 to transport and…

A: Free cash flows are cash flows that are available for investors after firm have met all operating…

Q: Marshall Miller & Company is considering the purchase of a new machine for $50,000, instated. The…

A: An asset's projected or estimated worth at the end of its useful life, net of any taxes, is its…

Q: Your company is considering a new project that will require $100,000 of new equipment at the start…

A: Given:

Q: Acefacto Inc., has asked for you to calculate the after-tax salvage value of an asset it plans on…

A: Data given: Sale price=$595,641 Book value after 10 years=$670,000 Tax rate=31%

Q: Daily Enterprises is purchasing a $10.4 million machine. It will cost $46,000 to transport and…

A: Step 1: The calculation of free cash flow for year 0 Given:Cost of machinery = $10,400,000Transport…

Q: Your company is considering a new project that will require $790,000 of new equipment at the start…

A: Depreciation per year = ($790,000 - $255,000) / 5.= $107,000.

Q: Gluon Incorporated is considering the purchase of a new high pressure glueball. It can purchase the…

A: Equivalent annual savings is the cost of operating and maintaining an asset annually. It is also…

Q: Dobson Corp. is considering the purchase of a new piece of equipment. The cost savings from the…

A: Answer a) Calculation of Accounting Rate of Return Accounting Rate of Return = Average annual…

Q: Zeon, a large, profitable corporation, is considering adding some automatic equipment to its…

A: To identify if the project is worth investing, the Net Present Value of the entire project is…

Q: Outback is purchasing a new machine that will cost $98,000. The machine will qualify as MACRS 5-year…

A: The question is based on the concept of Financial Management. Net cash flow is the cash calculated…

Q: Ilana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $1.4 million. The…

A: The worth of all future cash flows, both positive and negative, discounted to the present, during…

Q: A corporation is considering purchasing a machine that will save $150,000 per year before taxes. The…

A: Yearly savings = $150,000Maintenance = $30,000Life = 5 yearsMACRS Depreciation for 5 years…

Q: B2B Company is considering the purchase of equipment that would allow the company to add a new…

A: Net Income$98,700Add: Depreciation$31,600Annual Cash Flow ($98,600 + $31,600)$130,300Annual Cash…

Q: Godo AAU Company is considering the purchase of equipment that would allow the company to add a new…

A: NET PRESENT VALUENet Present Value is one of the Important Capital Budgeting Techniques. Net Present…

Q: An asset with 5-year MACRS life will be purchased for $12,000. It will produce net annual benefits…

A: Rate of return refers to the income from the investment annually expressed in a form of a…

Q: Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the…

A: The payback period is a financial metric used to determine the length of time it takes for an…

Q: pany has purchased a machine at the cost of $35,000. The machine is expected to provide annual…

A: NPV is net present value and is most used capital budgeting method being used and based on the time…

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Equivalent annual cost refers to the cost incurred for owning, operating, and the maintenance of an…

Q: what is the after tax salvage value?

A: Information Provided: Initial costs = $190,000 Maintenance costs = $34,000 Life = 3 years…

Q: The free cash flow for years 1-5 will be $ (Round to the nearest dollar.)

A: free cash flow for year 0 = Purchase price + Transport and Installation costs. free cash flow per…

Q: Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be…

A: TCF = Selling price - book value - Tax.

Q: your company is considering a new project that will require $10,000 of new equipment at the start of…

A: Annual depreciation =(Cost-Salvage value)/Useful Life =(10000-3000)/5 =$1400/year

Q: B2B Company is considering the purchase of equipment that would allow the company to add a new…

A: The Net Present value is calculated with the help of following formula Net Present Value = Present…

Q: to Inc., has asked for you to calculate the after-tax salvage value of an asset it plans on using in…

A: Salvage value is the value at the end of a project when equipment is sold, If equipment is sold…

Q: Floopy Co has decided to purchase new equipment. They are in the 38% tax bracket.  The desired…

A: ParticularsAmountEquipment cost      77,000Interest12%Tax rate38%Loan payments…

Q: Your Company is considering a new project that will require $2,000,000 of new equipment at the start…

A: Solution:- Depreciation is a tax deductible expense and therefore companies get tax shield on…

Q: A corporation is considering purchasing a machine that will save​ $150,000 per year before taxes.…

A: Here, Savings before tax per year is $150,000 Operating Cost per year is $30,000 Life of Machine is…

Q: Wilson Corp, is considering the purchase of a new piece of equipment. The cost savings from the…

A: Net present value is one of the important calculation done in capital budgeting. Under this, present…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.