Need answer please not use ai Consider the following data: Silicon Valley Companypurchased an asset costing $72,000 that is expected toproduce 500,000 units and have a salvage value of $6,000.The first year, 90,000 units are produced; the second year,82,000 units are produced; the third year, 94,000 units areproduced. Using the units-of-production method, thebook value of the asset at the end of year 3 would be:A. $60,120B. $36,888C. $23,408D. $10,824E None of these answers are correct

Step 1: Define DepreciationDepreciation is a non-cash expense charged in the income statement to…

Answered: Consider the following data: Silicon…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that the equipment consists of an input device with a cost of $60,000, residual value of $5,000, and useful life of 5 years; a processor with a cost of $140,000, residual value of $10,000, and useful life of 10 years; and an output device with a cost of $231,000, residual value of $22,000, and useful life of 12 years. The equipment is expected to provide benefits evenly over time. Also assume that the equipment has a salvage value of $30,000 and a physical life of 14 years. The salvage values of the input device, processor, and output device are $3,000, $8,000, and $19,000, respectively. The physical lives of the input device, processor, and output device are 6 years, 12 years, and 14 years, respectively. Calculate the amount of depreciation for 2020, 2021, and 2022 using the straight-line method. Crane Company Ltd. prepares financial statements under ASPE. (Round answer to 0 decimal places, e.g. 5,275.)
Consider a capital expenditure project that has forecasted revenues equal to $32,000 per year; cash expenses are estimated to be $29,000 per year. The cost of the project equipment is $23,000, and the equipment’s estimated salvage value at the end of the project is $9,000. The equipment’s $23,000 cost will be depreciated on a straight-line basis to $0 over a 10-year estimated economic life. Assume that the project requires an initial $7,000 working capital investment. The company’s marginal tax rate is 30%. Calculate the project’s net present value using a 12% discount rate.
A two-year project has an initial requirement of $500,000 for fixed assets and $100,000 for net working capital. The fixed assets will be depreciated using MACRS and the fixed asset falls into the three-year MACRS class. Depreciation rates for years 1 and 2 are 0.3333 and 0.4445. The estimated salvage value is $120,000. All of the net working capital will be recouped at the end of the 2 years. Management estimates that sales revenues less costs will be $700,000 per year for years 1 and 2. The discount rate is 9 percent and tax rate is 35 percent. What is the initial investment for this project? $513,327.50 ○ $600,000 $1,300,000 $500,000
A new production system for a factory is to be purchased and installed for $135331. This system will save approximately 300,000 kWh of electric power each year for a 6-year period. Assume the cost of electricity is $0.10 per kWh, and factory MARR is 15% per year, and the salvage value of the system will be $8662 at year 6. Using the PW method to analyzes if this investment is economically justified A- calculate the PW of the above investment and insert the result below.
The table given below lists the relevant cost items for a specific system purchase. The operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be five years. The salvage value for depreciation purposes is equal to 25% of the hardware cost. Cost Item Cost Hardware $160,000 Training $15,000 Installation $15,000 a) What is the Book Value (BV) of the device at the end of year three if the Straight Line (SL) depreciation method is used? b) Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the double declining balance depreciation method for the remainder of the device's life (the remaining three years). What is the device's BV at the end of four years?
Using the information in the following table, what is the NPV of the project (rounded to the nearest dollar)? Dunaway Industries is evaluating the idea of expanding their production facility in Cobb County The CFO gathered the following data. Dunaway Industries spent $500,000 researching other sites for their expansion The equipment needed for the expansion will cost $25,600,000 fully installed . The equipment will be depreciated over 20 years to a salvage value of $1.000.000 . Dunaway Industries uses straight -line depreciation . If Dunaway accepts the project the company will sell the equipment for salvage value ( i.e.$ 1,000,000 ) at the end of the life of the project If Dunaway Industries adds the new equipment , sales are expected to increase by 17,400,000 and costs are expected to increase by $ 10,000,000 . The appropriate tax rate for Dunaway Industries is 30 % The capital of the firm includes 70 % of equity and 30 % of debt . Dunaway Industries recently issued a bond with 30…
Company Q is considering a project which needs an equipment. The cost of the equipment is $350,000. This equipment will be depreciated for five years on a straight-line basis to zero-salvage value. The market value of the equipment at the end of the fifth year is $25,000. Initial investment in working capital is $22,000. Annual sales and operating costs (excluding depreciation) from this project are $175,000 and 93,000 respectively. Company pays tax at 40%. The annual operating cash flow from this project is: a. $75,200 b. $64,000 c. $62,000 d. $77,200
An automation asset with a high first cost of $10 million has a capital recovery (CR) of $1,985,000 per year. The correct interpretation of this CRvalue is that:a. the owner must pay an additional $1,985,000 each year to retain the asset.b. each year of its expected life, a net revenue of $1,985,000 must be realized to recover the $10 million first cost and the required rate ofreturn on this investment.c. each year of its expected life, a net revenue of $1,985,000 must be realized to recover the $10 million first cost.d. the services provided by the asset will stop if less than $1,985,000 in net revenue is reported in any year.
Kro Ltd has designed a new product and conducted a market survey to assess its viability. The survey has determined that the new product will generate sales of $9 million per year. Annual total cost (excluding depreciation expense) will come to $1.2 million. The equipment necessary for production will cost $8 million and is to be depreciated evenly over the project’s life of 4 years (straight-line method). At the end of 4 years, the equipment has a zero scrap value. The tax rate is 30%. The company believes the project is considered to be of similar risk to the company’s existing assets. Kro’s capital consists of the following: Ordinary Shares: The company has 1.5 million ordinary shares outstanding, currently sell for $50 per share and has a beta of 1.6. The market portfolio return is 17% and the risk-free rate is 5% Preference Shares: The company has 200,000 preference shares, which currently sell for $45 and pay a $5 dividend per year. Bonds: The company has…
Consider a capital expenditure project with an expected 10-year economic life and forecasted revenues equal to $40,000 per year; cash expenses are estimated to be $29,000 per year. The cost of the project equipment is $23,000, and the equipment's estimated salvage value at the end of the project is $9,000. The equipment's $23,000 cost will be depreciated using MACRS depreciation (7-year asset). The project requires a $7,000 working capital investment in year 0 and another $5,000 in year 5. The company's marginal tax rate is 40%. Calculate the expected net cash flow in year 10 of the project.
Assume that a company purchased a new machine for $19,000 that has a salvage value of $3,000 at the end of its useful life of five years. The machine is expected to save the company $6,000 a year in cash operating costs for five years. The company’s discount rate is 15%. The profitability index of this investment opportunity is closest to:
A machine costs $180,000 and will have an eight-year life, a $20,000 salvage value, and straight-line depreciation is used. Management estimates the machine will yield an after-tax net income of $12,500 each year. Compute the accounting rate of return for the investment.

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