Harbor Systems purchased an asset costing $150,000 that is expected to produce 1,000,000 units and have a salvage value of $30,000. • • • In the first year, 250,000 units are produced. In the second year, 220,000 units are produced. In the third year, 230,000 units are produced. Using the units-of-production method, what would be the book value of the asset at the end of year 3?
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- Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?A currently owned shredder used in a refuse-powered electrical generating plant has a present net realizable value of$210,000 and is expected to have a market value of $10,000 after 4 years. Operating and maintenancedisbursements are $100,000 per year. An equivalent shredder can be leased for $200 per day plus $80 perhour of actual use as determined by an hour meter, with both components assumed to be paid at year-end. Actual useis expected to be 1,500 hours and 250 days per year. Using a 4-year planning horizon, a before-tax analysis, and aMARR of 15 percent, determine the preferred alternative using the annual cost criterion.a. Consider only the above information and use the cash flow approach (insider’s viewpoint approach). (11.2.1)b. Consider the addition of a third alternative, to operate without any shredder at all, at an annual cost of $190,000.Use the cash flow approach (insider’s viewpoint approach). (11.2.1)c. Consider only the above information and use the opportunity cost…An asset is considering the purchase of a new equipment. This equipment will cost $100,000 and will be depreciated using an MACRS GDS recovery period of 7 years. The equipment is expected to have a market value of $40,000 at the end of its estimated 8-year life. What is the depreciation amount on the second year? What is the Book Value at the end of the 3rd year? Assume that the asset will be disposed of in year 3.
- 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 $15,000 a) What is the Book Value (BV) of the device at the end of year three if the Straight Line (SL) depreciation method is used? b) Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the double declining balance depreciation method for the remainder of the device's life (the remaining three years). What is the device's BV at the end of four years?A) Calculate the SYD depreciation charges for year 2 for electro-optics equipment with B = 25,000SR, S = 4000SR, and an 8-year recovery period. B) An asset has a first cost of 100,000SR with 20,000SR salvage value after 5 years: Calculate the annual depreciation and compute the book value of the asset by the end of each year using straight line depreciation.A company will invest in a machine worth 50000$ to produce a new product. The economic life of the machine is 4 years and its scrap value is 1000$. It will be produced on this machine The annual sales revenue of the product is expected to be 25000 $. Annual operation of the machine Expenditure is expected to be 10000 $. A) The amount of depreciation that will be allocated each year for the equipment to be purchased is Find it with the proportional depreciation method. B) The income tax is 40% and the investment will be made with the company’s equity. Assuming, find the net cash flows that will be generated by purchasing the machine.
- The price of a system of jockey pumps is P5,500,000. PLM decided to purchase this system and spent P215,500 for shipping and installation. The equipment will last for 10 years with a salvage value of 3% of its total cost. Determine the following: a. Yearly charge of depreciation using SL method. b. Depreciation charge on the 6 th year, and book value at the end of 8th year using SYD method.A company can buy a machine that is expected to have a three-year life and a $30,000 salvage value. The machine will cost $1,800,000 and is expected to produce a $200,000 annual income to be received at the end of each year. Annual depreciation expense is $590,000 per year. If a table of present values of $1 at 12% shows values of 0.8929 for one year, 0.7972 for two years, and 0.7118 for three years, what is the net present value of the cash flows from the investment, discounted at 12% ? Multiple Choice $118.855 $583,676 $629,788 GFactor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $10,000 salvage value. Additional annual information for this new product line follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product $ 1,970,000 Expenses Materials, labor, and overhead (except depreciation) 1,502,000 Depreciation—Machinery 120,250 Selling, general, and administrative expenses 180,000 Required:1. Determine income and net cash flow for each year of this machine’s life2. Compute this machine’s payback period, assuming that cash flows occur evenly throughout each year.3. Compute net present value for this machine using a discount rate of 7%. Do do not give solution in image fromat
- Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $20,000 salvage value. Additional annual information for this new product line follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Sales of new product $ 1,940,000 Expenses Materials, labor, and overhead (except depreciation) 1,507,000 Depreciation—Machinery 117,750 Selling, general, and administrative expenses 149,000 Required:1. Determine income and net cash flow for each year of this machine’s life.2. Compute this machine’s payback period, assuming that cash flows occur evenly throughout each year.3. Compute net present value for this machine using a discount rate of 7%Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $499,000 cost with an expected four-year life and a $20,000 salvage value. Additional annual information for this new product line follows. (PV of $1, FV of $1, PVA of $1, and FVA of $1) Note: Use appropriate factor(s) from the tables provided. Sales of new product $ 1,870,000 Expenses Materials, labor, and overhead (except depreciation) 1,508,000 Depreciation—Machinery 119,750 Selling, general, and administrative expenses 157,000 Required: Determine income and net cash flow for each year of this machine’s life. Compute this machine’s payback period, assuming that cash flows occur evenly throughout each year. Compute net present value for this machine using a discount rate of 7%.A company is considering three pieces of equipment. Equipment A has a first cost of $80,000, AOC of $20,000, and a salvage value of $19,000 after 3 years. Equipment B will cost $210,000 with an AOC of $35,000 and a salvage of $40,000 after 9 years, and Equipment C has the first cost of S150,000 with an AOC of $28,000 and a salvage value of 30,000 after 6 years Which equipment should the company select at an interest rate of 10% per year?
