The Briggs and Stratton Commercial Division designs and manufacturers small engines for golf turf maintenance equipment. A robotics-based testing system with support equipment will ensure that their new signature guarantee program entitled 'Always Insta-Start" does indeed work for every engine produced. First cost of equipment AOC per Year Salvage Value Estimated Life Pull System $-1,450,000 $-680,000 $100,000 8 years Determine the salvage value for the push system that will make the company indifferent to the two systems. Also, MARR-14% per year. The salvage value for the push system is determined to be $ Push System $-2,150,000 $-560,000 $60,000 8 years ✔ in $1000 units.

The Briggs and Stratton Commercial Division designs and manufacturers small engines for golf turf maintenance equipment. A robotics-based testing system with support equipment will ensure that their new signature guarantee program entitled 'Always Insta-Start" does indeed work for every engine produced. First cost of equipment AOC per Year Salvage Value Estimated Life Pull System $-1,450,000 $-680,000 $100,000 8 years Determine the salvage value for the push system that will make the company indifferent to the two systems. Also, MARR-14% per year. The salvage value for the push system is determined to be $ Push System $-2,150,000 $-560,000 $60,000 8 years ✔ in $1000 units.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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DuPree Coffee Roasters, Inc., wishes to expand and modernize its facilities. The installed cost of a proposed computer-controlled automatic-feed roaster will be $130,000. The firm has a chance to sell its 4-year-old roaster for $35,000. The existing roaster originally cost $60,000 and was being depreciated using MACRS and a 7-year recovery period Percentage by recovery year* Recovery year 3 years 5 years 7 years 10 years 1 33% 20% 14% 10% 2 45% 32% 25% 18% 3 15% 19% 18% 14% 4 7% 12% 12% 12% 5 12% 9% 9% 6 5% 9% 8% 7 9% 7% 8 4% 6% 9 6% 10 6% 11 4% Totals 100% 100% 100% 100% DuPree is subject to a 21%tax rate. a. What is the book value of the existing roaster? b. Calculate the after-tax…
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