The purchase price of a front-end loader, including the tires, sales tax, and all other costs associatedwith its purchase, is $117,450. The life of the loader is 6 years, at which time it will have anestimated salvage value of $11,500. The replacement cost of the tires is $7,500 for all tires on theloader and is not to be included in the depreciation and interest cost. The loader is expected to beused 1,200 hours per year. Determine the annual depreciation and interest cost of the loader usingan interest rate of 7%.O $15.97/hrO $18.37/hrO $17.88/hrO $14.75/hr

The equipment is going to be decrease in value and with use of equipment annually the value of…

Answered: he purchase price of a front vith its…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A new barcode reading device has an installed cost basis of $21,700 and an estimated service life of seven years. It will have a zero salvage value at that time. The 200% declining balance method is used to depreciate this asset a. What will the depreciation charge be in year seven? b What is the book value at the end of year six? c What is the gain (or loss) on the disposal of the device if it is sold for $3,000 after six years? a. The depreciation charge in year seven will be (Round to the nearest dollar.) b The book value at the end of year six is $ (Round to the nearest dollar.) c The on the disposal of the device if it is sold for $3,000 after six years is $1. (Round to the nearest dollar.) gain loss
An old automobile is traded for a new automobile with a list price of $30,000. The old automobile has a net book value of $5,000, but the dealer has given $6,000 trade-in allowance, so the total purchase price is $24,000. The automobile will be depreciated according to the five-year MACRS class. Determine the cost basis to use and compute the MACRS percentages and the depreciation amounts for the new automobile.
The La Salle Bus Company has decided to purchase a new bus for $85,000 with a trade-in of their old bus. The old bus has a BV of $10,000 at the time of the trade in. The new bus will be kept for 10 years before being sold. Its estimated SV at that time is expected to be $5,000. Find out all different parameters of SL depreciations.
A company is considering purchasing factory equipment that costs $327340 and is estimated to have no salvage value at the end of its 5.6-year useful life. If the equipment is purchased, annual revenues are expected to be $150900 and annual operating expenses exclusive of depreciation expense are expected to be $25000. The straight-line method of depreciation would be used. The cash payback period on the equipment is 5.95 years. 2.6 years. 5.6 years. 2.17 years.
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A new machine costs $200,000 and has a useful life of 5 years, with a salvage value of $30,000. It will cost $5,000 to dismantle and remove the machine at the end of its useful life. Use straight line depreciation to determine book value of asset at end of year 3.
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.
Coronado Company purchased Machine #201 on May 1, 2025. The following information relating to Machine #201 was gathered at the end of May. Price Credit terms Freight-in Preparation and installation costs Labor costs during regular production operations (a) It is expected that the machine could be used for 10 years, after which the salvage value would be zero. Coronado intends to use the machine for only 8 years, however, after which it expects to be able to sell it for $1,860. The invoice for Machine #201 was paid May 5, 2025. Coronado uses the calendar year as the basis for the preparation of financial statements. 1. Compute the depreciation expense for the years indicated using the following methods. Straight-line method for 2025 2. Sum-of-the-years'-digits method for 2026 3. $105,400 2/10, n/30 $992 $4,712 $13,020 Double-declining-balance method for 2025 $ $ $ Depreciation Expense
The invoice price of a machine is $50,000. Various other costs relating to the acquisition and installation of the machine including transportation, electrical wiring, special base, and so on amount to $7,500. The machine has an estimated life of 10 years, with no residual value at the end of that period.The owner of the business suggests that the incidental costs of $7,500 be charged to expense immediately for the following reasons.1. If the machine should be sold, these costs cannot be recovered in the sales price.2. The inclusion of the $7,500 in the machinery account on the books will not necessarily result in a closer approximation of the market price of this asset over the years, because of the possibility of changing demand and supply levels.3. Charging the $7,500 to expense immediately will reduce federal income taxes.Discuss each of the points raised by the owner of the business.
The Darlington Equipment Company purchased a machine5 years ago at a cost of $85,000. The machine had an expected life of 10 years at thetime of purchase, and it is being depreciated by the straight-line method by $8,500per year. If the machine is not replaced, it can be sold for $15,000 at the end of itsuseful life.A new machine can be purchased for $170,000, including installation costs. Duringits 5-year life, it will reduce cash operating expenses by $40,000 per year. Sales are notexpected to change. At the end of its useful life, the machine is estimated to be worthless.MACRS depreciation will be used, and the machine will be depreciated over its 3-year classlife rather than its 5-year economic life, so the applicable depreciation rates are 33%, 45%,15%, and 7%.The old machine can be sold today for $55,000. The firm’s tax rate is 40%. The appropriateWACC is 9%.a. If the new machine is purchased, what is the amount of the initial cash flow atYear 0?b. What are the incremental cash…
Ane barcode reading device has an instated cost basis of $21,760 and an estimated service life of seven years it will have a zero salvage valun at that time. The 150% deckning balance method is used to depreciate this asset a. What will the depreciation charge be in yearseven? b. What is the book value at the end of years? e What is the gain (or loss) on the disposal of the device if it is sold for $900 after six years? a. The depreciation charge in year soven will be $(Round to the nearest dollar) CETTE
The initial cost of the machine including its installation is 930,000. The expected life of the machine is 13 years for depreciation. The estimated salvage value of the equipment is 66,000 and the cost of dismantling is 22,000. Using the Declining Balance Method, what is the annual depreciation charge and what is the book value of the machine at the end of the eight year.

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