Power Manufacturing has equipment that it purchased 5 years ago for $1,850,000. The equipment was used for a project that was intended to last for 7 years. However,due to low demand, the project is being shut down. The equipment was depreciated using the straight-line method and can be sold for $265,000 today. The company'stax rate is 34 percent. What is the aftertax salvage value of the equipment?O O$354,614$175,386$309,807$355,100$265,000

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Answered: Power Manufacturing has equipment that…

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 company is considering replacing an existing machine with a more moden one. Here are some of the details: The tax rate is 40%. Assume straight-line depreciation and a RRR of 10%. Assume the salvage value of the investment is equal to zero when calculating the depreciation charge. O Find the NPV associated with the project Old Machine New Machine $1,000,000 (7 years ago) $1,500,000 $200,000 $300,000 $0 (3 years from now) Purchase Price Market Value $1,500,000 $1,500,000 $100,000 (10 years from now) Book Value Salvage Value Age Original Life Yearly capacity Sales Price 7 10 10 55,000 units $7/unit 90,000 units $7/units Yearly expenses $100,000 $90,000 Training expenses Inventory not applicable $5,000 $30,000 $75,000
A delivery car had a first cost of $36,000, an annual operating cost of $16,000, and an estimated $3500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 14% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle? The market value of the used vehicle is determined to be $ .
2. Brown Company bought a new machine 1 year ago for 12 million dollars. At that time the machine was estimated to have a life of 6 years and no salvage value. Annual operating costs are estimated at 20 million dollars. A new machine produced by another company does the same job but with an annual operating cost of only 17 million dollars. This new machine costs $21 million with a 5 year lifespan and no salvage value. The old machine can be sold for 10 million dollars. Straight-line depreciation is used and 40 percent corporate tax. If the cost of capital is 8 percent after taxes, calculate:a). Initial investment costsb). After-tax incremental cash flow.c). NPV of new investment.
John Morse Corporation buys a van for $16,000. The estimated life of the van is four years. The residual value of the van is $4,000. After two years, the van is sold for $8,000. What was the difference between the book value and the amount received from selling the van if John used the straight-line method of depreciation?
The workshop equipment that costs $4675, has a life of 11 years and no salvage value. The capitalized cost in dollar if money worth 10% is: 4860.28 O 9535.28 O 6029.03 O 7197.78 O 11171.53
This is my last attempt. Please answer correctly. I will rate accordingly
Original Cost POST. ... Accumulated Depreciation for Previous Years DATE DESCRIPTION REF. DEBIT CREDIT ... Book Value, Beginning Year 4 1 20xx ... Revised Salvage Value 2 2. ... Revised Remaining Depreciation Cost 3 ... 4 Revised Useful Life 3 Years Revised Depreciation, Total Revised Depreciation, Per Year ...
A company just purchased a new vehicle for $25,000. The vehicle's salvage value at EOY1 is 80% of the initial cost and decreases by 20% every year afterwards. The O&M cost in Year 1 is zero, but is $950 in Year 2 and increases by $950 annually. The company's MARR is 10%. The economic life of the vehicle is years. O A.6 OB.5 OC.7 OD.85 O E. 3 OF. 4
XYZ Company purchases a new machine for $50,000 with a useful life of 5 years and no salvage value. The company uses straight-line depreciation. Calculate the annual depreciation expense for the machine.
An Americana Airway jet costs $40,000,000 and is expected to fly 400,000,000 miles during its 8-year life. Residual value is expected to be zero because the plane was used when acquired. If the plane travels 23,000,000 miles the first year, how much depreciation should Americana Airway record under the units-of-production method? (Round the depreciation per unit to two decimal places) OA. $5,000,000 OB. $10,000,000 OC. $2,300,000 OD. Cannot be determined from the data given CHED
Nuts-R-Us, Inc. purchased nut-shelling equipment at a total cost of $80,000. The equipment was depreciated by using MACRS with a recovery class of 3 years and an anticipated end-of-useful-life value of $8000. The company has decided the equipment is no longer needed after two years and wishes to determine the minimum value it can accept for the equipment (that is, the lowest value that will result in no loss on the sale). Find the minimum selling price for the equipment.

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