The Parkview Hospital is considering the purchase of a new autoclave. This equipment will cost $161,000. This asset will be depreciated using an MACRS (GDS) recovery period three years. What is the BV at the end of the second year? Click the icon to view the GDS Recovery Rates (r) for the 3-year property class. Choose the correct answer below. O A. The BV at the end of the second year is $51,520, O B. The BV at the end of the second year is $107,339 OC. The BV at the end of the second year is $35,774. O D. The BV at the end of the second year is $71,565,
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- Sheep Ranch Golf Academy is evaluating new golf practice equipment. The "Dimple- Max" equipment costs $110,000, has a 4-year life, and costs $9,100 per year to operate. The relevant discount rate is 12 percent. Assume that the straight-line depreciation method is used and that the equipment is fully depreciated to zero. Furthermore, assume the equipment has a salvage value of $8,300 at the end of the project's life. The relevant tax rate is 24 percent. All cash flows occur at the end of the year. What is the equivalent annual cost (EAC) of this equipment? (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) EACThe AW values for retaining a presently owned machine for additional years are shown in the table. Note that the values represent the AW amount for each of the n years that the asset is kept, i.e., if it is kept 5 more years, the annual worth is $−95,000 for each of the 5 years. Assume that future costs remain as estimated for the replacement study and that used machines like the one presently owned will always be available. (a) What is the ESL and associated AW of the defender at a MARR of 12% per year? (b) A challenger with an ESL of 7 years and an AWC = $-88,000 per year has been identified. Which AW will be less for the respective ESL periods? Retention Period, Years AW Value, $ per Year 1 -87,000 2 -93,000 3 -85,000 4 -83,000 5 -95,000 a) The ESL of the defender is_____ year(s) with the lowest AW of $_________ . b) The______________ has the lower AW at _________$ for n equal to ______ .Ralph’s Bow Works (RBW) is planning to add a new line of bow ties that will require the acquisition of a new knitting and tying machine. The machine will cost $1.3 million. It is classified as a 7-year MACRS asset and will be depreciated as such. Interest costs associated with financing the equipment purchase are estimated to be $50,000 per year. The expected salvage value of the machine at the end of 10 years is $80,000. The decision to add the new line of bow ties will require additional net working capital of $55,000 immediately, $30,000 at the end of year 1, and $10,000 at the end of year 2. RBW expects to sell $370,000 worth of the bow ties during each of the 10 years of product life. RBW expects the sales of its other ties to decline by $23,000 (in year 1) as a result of adding this new line of ties. The lost sales level will remain constant at $23,000 over the 10-year life of the proposed project. The cost of producing and selling the ties is estimated to be $70,000 per year.…
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- A highly specialized piece of equipment has a first cost of $50,000. If this equipment is purchased, it will be used to produce income (through rental) of $20,000 per year for only four years. At the end of year four, the equipment will be sold for a negligible amount. Estimated annual expenses for upkeep are $3,000 during each of the four years. The MACRS (GDS) recovery period for the equipment is seven years, and the firm’s effective income tax rate is 40%. Solve, (a) If the after-tax MARR is 7% per year, should the equipment be purchased? (b) Rework the problem, assuming that the equipment is placed on standby status such that depreciation is taken over the full MACRS recovery period.Pilot Plus Pens is deciding when to replace its old machine. The old machine's current salvage value is $3 million. Its current book value is $2 million. If not sold, the old machine will require maintenance costs of $500,000 at the end of the year for the next five years. Depreciation on the old machine is $400,000 per year. At the end of five years, the old machine will have a salvage value of $400,000 and a book value of $0. A replacement machine costs $4 million now and requires maintenance costs of $350,000 at the end of each year during itsfeconomic life of five years. At the end of the five years, the new machine will have a salvage value of $1,000,000. It will be fully depreciated by the straight-line method. In five years, a replacement machine will cost $5,000,000. Pilot will need to purchase this machine regardless of what choice it makes today. The corporate tax rate is 28 percent and the appropriate discount rate is 10 percent. The company is assumed to earn sufficient…Bartlett Car Wash Company is considering the purchase of a new facility. It would allow Bartlett to increase its net income by $98,389 per year. Other information about this proposed project follows: Initial investment $461,920 Useful life Salvage value 9 years $40,000 Assume straight line depreciation method is used. Required: 1. Calculate the accounting rate of return for Bartlett. Note: Round your percentage answer to 2 decimal places. 2. Calculate the payback period for Bartlett. Note: Round your answer to 2 decimal places. Answer is complete but not entirely correct. 20.52 X % 4.90 x years 1. Accounting Rate of Return 2. Payback Period