nce are estimated at $4,000, $9,750 and 2000, respectively on. The value of the land is estimated to be $37,000. Addi ed for improvements including driveway, walks, and lands lue of the property using the cost approach?
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- A gas-powered electric generator is purchased by a public utility as part of an expansion program. It is expected to be useful, with proper maintenance, for an estimated 30 years. The cost is $17 million, installed. The salvage value at the end of 30 years is expected to be 10% of the original cost, not counting installation. a. What is the MACRS-GDS property class? b. Determine the depreciation deduction and the unrecovered investment for years 1, 5, and the last depreciable year of the generator.A current asset (defender) is being evaluated for potential replacement. It was purchased four years ago at a cost of $62,000. It has been depreciated as a MACRS (GDS) five-year property-class asset. The present MV of the defender is $12,000. Its remaining useful life is estimated to be four years, but it will require additional repair work now (a one-time $4,000 expense) to provide continuing service equivalent to the challenger. The current effective income tax rate is 39%, and the after-tax MARR = 15% per year. Based on an outsider viewpoint, what is the after-tax initial investment in the defender if it is kept (not replaced now)?Freida Company is considering an asset replacement project ofreplacing a control device. This old control device has been fullydepreciated but can be sold for $5,000. The new control device, whichis more automated, will cost $42,000. The new device’s installation andshipping costs will total $16,000. The new device will be depreciatedon a straight-line basis over its 2-year economic life to an estimatedsalvage value of $0. The actual salvage value of this device at the endof 2-year period (That is, the market value of the device at the end of2-year period) is estimated to be $4,000. If the replacement project is accepted, Freida will require an initial working capital investment of$2,200 (that is, adding $2,200 initially to its net working capital).During the 1st year of operations, Freida expects its annual revenue toincrease from $72,800 to $90,000. After the 1st year, revenues fromthe replacement are expected to increase at a rate of $2,800 a year forthe remainder of the project…
- Freida Company is considering an asset replacement project ofreplacing a control device. This old control device has been fullydepreciated but can be sold for $5,000. The new control device, whichis more automated, will cost $42,000. The new device’s installation andshipping costs will total $16,000. The new device will be depreciatedon a straight-line basis over its 2-year economic life to an estimatedsalvage value of $0. The actual salvage value of this device at the endof 2-year period (That is, the market value of the device at the end of2-year period) is estimated to be $4,000. If the replacement project is accepted, Freida will require an initial working capital investment of$2,200 (that is, adding $2,200 initially to its net working capital).During the 1st year of operations, Freida expects its annual revenue toincrease from $72,800 to $90,000. After the 1st year, revenues fromthe replacement are expected to increase at a rate of $2,800 a year forthe remainder of the project…Freida Company is considering an asset replacement project of replacing a control device. This old control device has been fully depreciated but can be sold for $5,000. The new control device, which is more automated, will cost $42,000. The new device’s installation and shipping costs will total $16,000. The new device will be depreciated on a straight-line basis over its 2-year economic life to an estimated salvage value of $0. The actual salvage value of this device at the end of 2-year period (That is, the market value of the device at the end of 2-year period) is estimated to be $4,000. If the replacement project is accepted, Freida will require an initial working capital investment of $2,200 (that is, adding $2,200 initially to its net working capital). During the 1st year of operations, Freida expects its annual revenue to increase from $72,800 to $90,000. After the 1st year, revenues from the replacement are expected to increase at a rate of $2,800 a year for the remainder of…The cost of a new machine is $40,000 and the new machine takes $2,000 to install. At the end of its useful life, its salvage value is $5,000. Under the modified accelerated cost recovery system (MACRS), what is the depreciable value of the new machine? a $35,000 b $37,000 c $42,000 d $40,000
- Your company has purchased a large new truck-tractor for over-the-road use (asset class 00.26). It has a cost basis of $180,000. With additional options costing $15,000, the cost basis for depreciation purposes is $195,000. Its MV at the end of five years is estimated as $40,000. Assume it will be depreciated under the GDS: Solve, a. What is the cumulative depreciation through the endof year three? b. What is the MACRS depreciation in the fourth year? c. What is the BV at the end of year two?Clean Company acquired a tract of land containing an extractable natural resource. Clean is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2,000,000 tons, and that the land will have a value of $1,000,000 after restoration. Relevant cost information follows: Land $7,500,000 Estimated restoration costs 1,500,000 If Clean maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material? Oa. $4.00 Ob. $3.20 Oc. $2.60 d. $3.00A surface mount PCB placement/soldering line is to be installed for $1,800,000. It will have a salvage value of $90,000 after 5 years. Determine the depreciation deduction and the resulting unrecovered investment during each year of the asset’s life. Determine the depreciation deduction and the resulting unrecovered investment during each year of the asset’s life using declining balance depreciation using double declining balance switching to straight line depreciation.
- A surface mount PCB placement/soldering line is to be installed for $1,600,000. It will have a salvage value of $150,000 after 5 years. Determine the depreciation deduction and the resulting unrecovered investment during each year of the asset's life. Click here to access the MACRS-GDS Table Calculator Part a - Your answer is partially correct. Determine the depreciation deduction and the resulting unrecovered investment during each year of the asset's life using straight-line depreciation. EOY 0 1 Depreciation 0 640000 Balances 1600000 960000 2 384000 576000 3 234110 345600A chemical mixer was purchased 8 years ago for $100,000. If retained, it will require an investment of $50,000 to upgrade it; if upgraded, it will cost $35,000/year to operate and maintain (O&M) and will have a negligible salvage value after 5 years. A new mixer can be purchased for $120,000; it will have an annual O&M cost of $15,000 and a salvage value of $40,000 after 5 years. Alternatively, a mixer can be leased with 5 beginning-of-year lease payments of $20,000; O&M costs will be $18,000/year. If the mixer is replaced, the old mixer can be sold on the used equipment market for $15,000. Using an insider’s approach, what are (a) the EUAC of keeping the current mixer, (b) the EUAC of replacing with a new mixer, and (c) the EUAC of replacing with a leased mixer? The MARR is 10%.The equipment has a delivered cost of $58,000. An additional $4,000 is required to install the new equipment. The new control device falls into the 7-year class for depreciation and will be depreciated using MACRS. At the end of 8 years, the estimated Salvage Value of the new equipment is $20,000.The existing control device has been in use for approximately 10 years, and it has been fully depreciated (that is, its book value is zero for the old device). However, its current market value for the old device is estimated to be $5,000. The applicable tax rate is 34%. The new control device requires lower maintenance costs and frees personnel who would otherwise monitor the system. In addition, it reduces product wastage. In total, it is estimated that during its eight-year life, the yearly savings will amount to $20,000 if the new control device is used. Yearly sales revenue is unchanged. The illustrative firm’s cost of capital is 15%. Since the new machine is more efficient, that it will…