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A university student painter is considering the purchase of a new air compressor and paint gun to replace an old paint sprayer. (Both items belong to Class 9 and have a 25% CCA rate). These two new items cost $12,000 and have a useful life of four years, at which time they can be sold for $1,600. The old paint sprayer can be sold for $500 and could be scrapped for $250 in four years. The student believes that operating revenues will increase annually by $8,000. Should the purchase be made?
The tax rate is 22% and the required
please Show me the steps don't copy from cheggs .
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- The Campbell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,080,000, and it would cost another $18,000 to install it. The machine falls into the MACRS 3-year class, and it would be sold after 3 years for $634,000. The MACRS rates for the first three years are 0.3333, 0.4445, and 0.1481. The machine would require an increase in net working capital (inventory) of $14,500. The sprayer would not change revenues, but it is expected to save the firm $369,000 per year in before-tax operating costs, mainly labor. Campbell's marginal tax rate is 25%. (Ignore the half-year convention for the straight-line method.) Cash outflows, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest dollar. What is the Year-0 net cash flow? $ What are the net operating cash flows in Years 1, 2, and 3? Year 1: $ Year 2: $ Year 3: $ What is the additional…It costs $30,000 to retrofit the gasoline pumps at a certain filling station so the pumps can dispense E85 fuel (85% ethanol and 15% gasoline). If the station makes a profit of $0.08 per gallon from selling E85 and sells an average of 20,000 gallons of E85 per month, how many months will it take for the owner to recoup her $30,000 investment in the retrofitted pumps? The interest rate is 1% per month.[The following information applies to the questions displayed below.] Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2025, for $12,000. They expect to use the Suburban for five years and then sell the vehicle for $4,500. The following expenditures related to the vehicle were also made on July 1, 2025: • The company pays $1,800 to GEICO for a one-year insurance policy. ⚫ The company spends an extra $3,000 to repaint the vehicle, placing the Great Adventures logo on the front hood, back, and both sides. . An additional $2,000 is spent on a deluxe roof rack and a trailer hitch. The painting, roof rack, and hitch are all expected to increase the future benefits of the vehicle for Great Adventures. In addition, on October 22, 2025, the company pays $400 for basic vehicle maintenance related to changing the oil, replacing the windshield wipers, rotating the tires, and inserting a new air…
- You must analyze a potential new product—a caulking compound that Cory Materials’ R&D people developed for use in the residential construction industry. Cory’s marketing manager thinks the company can sell 115,000 tubes per year at a price of $3.25 each for 3 years, after which the product will be obsolete. The purchase price of the required equipment, including shipping and installation costs, is $175,000, and the equipment is eligible for 100% bonus depreciation at the time of purchase. Current assets (receivables and inventories) would increase by $35,000, while current liabilities (accounts payable and accruals) would rise by $15,000. Variable cost per unit is $1.95, and fixed costs would be $70,000 per year. When production ceases after 3 years, the equipment should have a market value of $15,000. Cory’s tax rate is 25%, and it uses a 10% WACC for average-risk projects. Find the required Year 0 investment outlay after bonus depreciation is considered and the project’s annual…Parker County Community College (PCCC) is trying to determine whether to use no insulation or to use insulation 1-inch thick or 2-inches-thick on its steam pipes. The heat loss from the pipes without insulation is expected to cost $1.50 per year per foot of pipe. A 1-inch thick insulated covering will eliminate 89% of the loss and will cost $0.40 per foot. A 2-inch thick insulated covering will eliminate 92% of the loss and will cost $0.85 per foot. PCCC Physical Plant Services estimates that there are 250,000 feet of steam pipe on campus. The PCCC Accounting Office requires a 10%/yr return to justify capital expenditures. The insulation has a life expectancy of 10 years. Determine which insulation (if any) should be purchased using an internal rate of return analysis.A private gym is looking at a new set of sports equipment with an installed cost of $465,000. This cost will be depreciated straight-line to zero over the project's five-year life, at the end of which the sports equipment can be scrapped for (TIP: "scrapped for" = sold for) $61,000. The sports equipment will save the gym $143,000 per year in pretax operating costs, and the equipment requires an initial investment in net working capital of $27,000. If the tax rate is 22 percent and the discount rate is 10 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV
- Hello, I am stuck with this problem. Could you help me please?The Highridge Water District needs an additional supply of water from Steep Creek. The engineer has selected two plans for comparison: Gravity plan: Divert water at a point 10 miles up Steep Creek and carry it through a pipeline by gravity. Pumping plan: Divert water at a point near the district and pump it through 2 miles of pipeline. The pumping plant can be built in two stages: half now and half 10 years later Annual benefits are $190,00 for both plans. Use a 35-year analysis period and 6% interest. Salvage values can be ignored. Use the conventional benefit–cost ratio method to select the more economical plan.A cooperative that makes value-added products like jams and jellies has voted to purchase a new machine to fill their jars. The machine costs $21,000 and has a investment life of 8 years. The IRS will allow them to depreciate it over 15 years. The marginal tax rate will be 18% over the next 9 years and the inflation rate will be 1.5%. The cooperative requires a 12% pre-tax rate of return and the risk premium is 3%. What is the present value of the tax savings from depreciation? Please select the correct one : $1,314 $1,216 $1,239 $1,261 None of the answers are correct
- Engr. Diamse is considering the purchase of a generating set to supply the electrical needs of his office during power interruptions. The first offer he received is for a gasoline driven unit with an estimated life span of 5 years and would cost him 52,000. The annual maintenance cost is estimated to be 8,300, annual operating cost would be 27,600 and salvage value would be 7,200. The second offer is for a diesel engine driven unit with an estimated life span of 10 years, annual maintenance cost of 5,800, operating yearly cost of 18,800 and salvage value of 11,900. The price offered for the unit is 98,250. If Engr. Diamse would need the services of a generator for 10 years, which of the two offers would be better to accept if cost of money is 20%. Compute on annual cost basisThe Sweetwater Candy Company would like to buy a new machine that would automatically “dip” chocolates. The dipping operation currently is done largely by hand. The machine the company is considering costs $210,000. The manufacturer estimates that the machine would be usable for five years but would require the replacement of several key parts at the end of the third year. These parts would cost $11,300, including installation. After five years, the machine could be sold for $6,000. The company estimates that the cost to operate the machine will be $9,300 per year. The present method of dipping chocolates costs $53,000 per year. In addition to reducing costs, the new machine will increase production by 5,000 boxes of chocolates per year. The company realizes a contribution margin of $1.65 per box. A 19% rate of return is required on all investments. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate discount factor(s) using tables. Required: 1. What are…The city is installing a new swimming pool in the east end recreation centre. One design being considered is a reinforced concrete pool that will cost $5000000 to install. Thereafter, the inner surface of the pool will need to be refinished and painted every 10 years at a cost of $450000 per refinishing. Assuming that the pool will have essentially an infinite life, what is the present worth of the costs associated with the pool design? The city uses a MARR of 6%. Review the following table and calculate the present worth of the project for a +5% change in refinishing costs. Round your answer to the nearest dollar. Parameter Construction Costs Refinishing Costs MARR [%] -10% -5% Base Case +5% +10% $5000000 $450000 6 Present Worth of -10% -5% 0% +5% Costs +10% Changes to Construction Costs Changes to refinishing Costs Changes to MARR ????? ?
