What is the market value of a company vehicle that cost $54 has a salvage of $6,000 and an expected life of six years; after three years, when the company sells the vehicle?
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- An automated assembly robot that cost $300,000 has a recovery period of five years with an expected $50,000 salvage value. If the MACRS depreciation rates for years 1, 2, and 3 are 20.0%, 32.0%, and 19.2%, respectively, what is the depreciation recapture, capital gain, or capital loss, provided the robot was sold after 3 years for $80,000?Nguyen Company has an opportunity to purchase an asset that will cost company $59,000. The asset is expected to add $23,000 per year to the company’s net income. Assuming the asset has a five-year useful life and zero salvage value, the unadjusted rate of return based on the average investment will be ?A delivery car had a first cost of $30,000, an annual operating cost of $12,000, and an estimated $4000 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 2 years and must be sold now as a used vehicle. (a) At an interest rate of 10% per year, what must the market value of the 2-year-old vehicle be in order for its AW value to be the same as the AW for a full 6-year life cycle? (b) Compare your answer in (a) with the first cost and expected salvage after 6 years. Is the required market value a reasonable one, in your opinion?
- 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 $ .A company is considering replacing an old machine. The trade-in value of the old machine is currently $30,000. The unit costs $250,000 annually to operate and maintain. A new unit can be purchased for $700,000 and will have annual O&M costs of $120,000. If the old unit is retained it will have no salvage value at the end of its remaining life of 10 years. The new unit, if purchased, will have a salvage value $50,000 in 10 years. Find a) the equivalent uniform annual cost (EUAC) for keeping the old machine, and b) the EUAC for replacing the old machine with the new machine. Should the old machine be replaced based on your calculations? The MARR is 10%. Use the cash flow approach (insider's viewpoint approach)XYZ Company has an opportunity to purchase and asset that will cost the company $60,000. The asset is expected to add $12,000 per year to the company’s net income. Assuming the asset has a 5-year useful life and a zero salvage value, the unadjusted rate of return will be?
- 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…A company plans to purchase a computer network control (CNC) machine for $650,000.00. If the company makes a profit from the products of the machine of $265,000.00 at years three and four and the company will be able to sell the machine at year four for $125,000.00 ( salvage value). The company wants to know if they will be able to recover the cost of the machine if the interest rate is 4% ? Provide them with the future value of the transactions to answer their question (if the number is negative it will not pay back, if it is positive it will). SOLVE IN EXCELBenson Enterprises is deciding when to replace its old machine. The machine’s current salvagevalue is $1.2 million. Its current book value is $1 million. If not sold, the old machine will requiremaintenance costs of $420,000 at the end of the year for the next five years. Depreciation on theold machine is $200,000 per year. At the end of five years, it will have a salvage value of $220,000.A replacement machine costs $3.5 million now and requires maintenance costs of $160,000 at theend of each year during its economic life of five years. At the end of five years, the new machinewill have a salvage value of $540,000. It will be fully depreciated using the three-year MACRSschedule. In five years a replacement machine will cost $4,000,000. Pilot will need to purchasethis machine regardless of what choice it makes today. The corporate tax is 35 percent and theappropriate discount rate is 10 percent. The company is assumed to earn sufficient revenues togenerate tax shields from…
- A new barcode reading device has an installed cost basis of $22,820 and an estimated service life of nine years. It will have a zero salvage value at that time. The 150% declining balance method is used to depreciate this asset. What is the gain (or loss) on the disposal of the device if it is sold for $3,200 after eight years?A new barcode reading device has an installed cost basis of $24,750 and an estimated service life of seven years. It will have a zero salvage value at that time. The 200% declining balance method is used to depreciate this asset. Solve, a. What will the depreciation charge be in year seven? b. What is the book value at the end of year six? c. What is the gain (or loss) on the disposal of the device if it is sold for $800 after six years?