You install all new hardwood floors in your upscale ski resort. The total cost of the floor installation is $62,000. Instead of realizing the full expense in this fiscal year, you will depreciate the cost over the useful life of the floors. You expect the floors will have a useful life of 12 years, and the scrap value will be $1,000. Using straight line depreciation, how much depreciation should you recognize each year? $4,000 $5,083.33
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- Penny and Daughter’s construction business is considering purchasing a new Bobcat. The equipment will cost $230,000 and is expected to last 14 years. The Bobcat has a salvage vale of $16,000. Calculate the depreciation AND book value for each year. You can create one table for a-d or you can create different tables for each. This problem will need to be done in excel. (30 points)a. Use straight-line depreciation. (5 points)b. Use declining-balance depreciation with a depreciation rate that ensures the book value equals the salvage vale in the last year of the life of the equipment. c. Use double declining balance depreciation. d. Use MACRS depreciation where the Bobcat is considered a 10 year property. e. Graph the Book values of each methods on a single graph. The graph should have points at each year for each BV and a line of each method. You will have 4 lines on your graph. You should include year 0 on your graph so that all four lines start at the same point. Each method should be…A robotics firm decides to install the latest computer server at a cost of $2 million which is going to increase its computational capacity. The installation cost is $200,000. The firm decides to use the server for the next eight years and then sell it at a price of $200,000. Using a straight line method, what will be the annual depreciation amount?Your plant manager wants you to buy a new lathe for $410000. The lathe should be useful to your company for 8 years at which point you plan to replace. The estimated salvage value at the end of the useful life is $20000. Using straight line depreciation what is the Book value when the asset is sold?
- Lowell Inc. is thinking about replacing an old computer with a new one. The new one will cost $1,000,000 and will have a life of FOUR years. The new computer qualifies as 5-year MACRS property. Years 1 2 3 4 Depreciation rate 20% 32% 19% 12% It will probably be worth about $330,000 after FOUR years. The old computer is being depreciated at a rate of $100,000 per year. It will be completely written off in FOUR years, at that time it will have zero resale value. We can sell it now for $410,000 after taxes. The new machine will save us $200,000 per year in operating costs. The tax rate (federal plus state) is 25 percent and WACC is 8 percent. What is the TOTAL FREE CASH FLOW FOR YEAR 4? Free cash flow = Total Initial Investment + Total annual project CF + Total Salvage Value 480,000 467,500 445,000 422,500A company is considering purchasing a machine for $26,500. The machine will generate income of $3,400 per year. Annual depreciation expense would be $1,600. What is the payback period for the new machine? Multiple Choice 3.3 years. 5.3 years. 7.8 years. 16.6 years. 14.7 years.You are equipping an office. The total office equipment will have a first cost of 2.0M and a salvage value of $200,000. You expect the equipment will last 10 years. Use a spreadsheet to compute the 40% bonus depreciation with MACRS depreciation schedule.
- The heat loss through the exterior walls of a processing plant is expected to cost the owner $3000 next year. A salesman from Superfiber, Inc. claims he can reduce the heat loss by 80% with the installation of $15,000 worth of Superfiber now. If the cost of heat loss rises by $200 per year, after next year (gradient), and the owner plans to keep the building 10 years, what is his rate of return, neglecting depreciation and taxes?To expand its product offerings, BreesCo will be installing $1,849,032 worth of new fixtures. These fixtures will be depreciated straight-line to zero over 4 years. What is the annual depreciation expense associated with these fixtures? (Enter the magnitude of your response rounded to the nearest dollar)The heat loss through the exterior walls of a processing plant is estimated tocost the owner $3,000 next year. A salesman from Super fiber, Inc. claims he canreduce the heat loss by 80% with the installation of $15,000 of Super fiber now.If the cost of heat loss rises by $200 per year, after next year , and the ownerplans to keep the building ten more years, what is his rate of return, neglectingdepreciation and taxes?
- You are equipping an office. The total office equipment will have a first cost of2.0Mand a sal-vage value of$200,000. You expect the equipment will last 10 years. Use a spreadsheet to compute the40%bonus depreciation with MACRS depreciation schedule.The heat loss through the exterior walls of a processing plant is estimated to cost the owner $3,000 next year. A salesman from Superfiber, Inc. claims he can reduce the heat loss cost by 80% with the installation of $15,000 of Superfiber now. If the cost of heat loss rises by $200 per year, after next year (gradient), and the owner plans to keep the building ten more years, what is his rate of return, neglecting depreciation and taxes Show complete solution pls. No excel computationYou are considering two options for manufacturing a typical product: You continue to use an old machine now in use which was bought 8 years ago at $12,000. It has been fully depreciated but can be sold for $7,00. If kept, it could be used for 3 more years (remaining useful life), at the end of which time it would have no salvage value. The annual operating and maintenance costs amount to $10,000 for the old machine. You purchase a brand new machine at an invoice price of $15,000 to replace the present equipment. Because of the nature of the product manufactured, it also has an expected economic life of 3 years, and will have a salvage value of $3,400 at the end of that time. With the new machine, the expected operating and maintenance costs amount to $3,000 for the first year and $4,000 in each of the next two years. What is the opportunity cost of not replacing the old machine now? $700 $1,300 $2,000 $10,000