Question
In: Finance
Hayden Inc. has a number of copiers that were bought four years ago for $20,000. Currently...
Hayden Inc. has a number of copiers that were bought four
years ago for $20,000. Currently maintenance costs $2,000 a year,
but the maintenance agreement expires at the end of two years and
thereafter the annual maintenance charge will rise to $8,000. The
machines have a current resale value of $8,000, but at the end of
year 2 their value will have fallen to $3,500. By the end of year 6
the machines will be valueless and would be scrapped.
Hayden is considering replacing the copiers with new machines
that would do essentially the same job. These machines cost
$25,000, and the company can take out an eight-year maintenance
contract for $1,000 a year. The machines will have no value by the
end of the eight years and will be scrapped.
Both machines are depreciated by using seven-year MACRS, and
the tax rate is 35%. Assume for simplicity that the inflation rate
is zero. The real cost of capital is 7%. When should Hayden replace
its copiers?
Thx! and also please show me how to calculate the
depreciation!
Solutions
jeff jeffy answered 7 months agoRelated Solutions
Hayden Inc. has a number of copiers that were bought four years ago for $32,000. Currently...
Hayden Inc. has a number of copiers that were bought four years
ago for $32,000. Currently maintenance costs $3,200 a year, but the
maintenance agreement expires at the end of two years, and
thereafter, the annual maintenance charge will rise to $9,200. The
machines have a current resale value of $9,200, but at the end of
year 2, their value will have fallen to $4,700. By the end of year
6, the machines will be valueless and would be scrapped....
Hayden Inc. has a number of copiers that were bought four years ago for $21,000. Currently...
Hayden Inc. has a number of copiers that were bought four years
ago for $21,000. Currently maintenance costs $2,100 a year, but the
maintenance agreement expires at the end of two years and
thereafter the annual maintenance charge will rise to $8,100. The
machines have a current resale value of $8,100, but at the end of
year 2 their value will have fallen to $3,600. By the end of year 6
the machines will be valueless and would be scrapped....
Hayden Inc. has a number of copiers that were bought four years ago for $21,000. Currently...
Hayden Inc. has a number of copiers that were bought four years
ago for $21,000. Currently maintenance costs $2,100 a year, but the
maintenance agreement expires at the end of two years and
thereafter the annual maintenance charge will rise to $8,100. The
machines have a current resale value of $8,100, but at the end of
year 2 their value will have fallen to $3,600. By the end of year 6
the machines will be valueless and would be scrapped....
Hayden Inc. has a number of copiers that were bought four years ago for $37,000. Currently...
Hayden Inc. has a number of copiers that were bought four years
ago for $37,000. Currently maintenance costs $3,700 a year, but the
maintenance agreement expires at the end of two years, and
thereafter, the annual maintenance charge will rise to $9,700. The
machines have a current resale value of $9,700, but at the end of
year 2, their value will have fallen to $5,200. By the end of year
6, the machines will be valueless and would be scrapped....
Hayden Inc. has a number of copiers that were bought four years ago for $22,000. Currently...
Hayden Inc. has a number of copiers that were bought four years
ago for $22,000. Currently maintenance costs $2,200 a year, but the
maintenance agreement expires at the end of two years, and
thereafter, the annual maintenance charge will rise to $8,200. The
machines have a current resale value of $8,200, but at the end of
year 2, their value will have fallen to $3,700. By the end of year
6, the machines will be valueless and would be scrapped....
Hayden Inc. has a number of copiers that were bought four years ago for $21,000. Currently...
Hayden Inc. has a number of copiers that were bought four years
ago for $21,000. Currently maintenance costs $2,100 a year, but the
maintenance agreement expires at the end of two years and
thereafter the annual maintenance charge will rise to $8,100. The
machines have a current resale value of $8,100, but at the end of
year 2 their value will have fallen to $3,600. By the end of year 6
the machines will be valueless and would be scrapped....
Hayden Inc. has a number of copiers that were bought four years ago for $23,000. Currently...
Hayden Inc. has a number of copiers that were bought four years
ago for $23,000. Currently maintenance costs $2,300 a year, but the
maintenance agreement expires at the end of two years and
thereafter the annual maintenance charge will rise to $8,300. The
machines have a current resale value of $8,300, but at the end of
year 2 their value will have fallen to $3,800. By the end of year 6
the machines will be valueless and would be scrapped....
Hi all, Please list all steps!! Hayden Inc. has a number of copiers that were bought...
Hi all,
Please list all steps!!
Hayden Inc. has a
number of copiers that were bought four years ago for $26,000.
Currently maintenance costs $2,600 a year, but the maintenance
agreement expires at the end of two years and thereafter the annual
maintenance charge will rise to $8,600. The machines have a current
resale value of $8,600, but at the end of year 2 their value will
have fallen to $4,100. By the end of year 6 the machines will...
John bought a car three years ago for $20,000 for personal use. In 2002, his car was...
John bought a car three years ago for
$20,000 for personal use. In 2002, his car was totally
destroyed by a tree that fell on the car. John did not
have insurance that covered this event. The car’s fair
market value before the tree came down was $9,000 and it was worth
$0 after the accident. He has no other personal casualty
gains or losses and his AGI for the year was
$50,000. John’s personal casualty loss is $8,000.
True/False and Explain.
You bought a car three years ago for $20,000 and financed $16,000 at 6 percent APR...
You bought a car three years ago for $20,000 and financed
$16,000 at 6 percent APR for 60 months. You are now thinking about
trading in your vehicle for a new one and would like to know how
much you still owe on the loan. Assuming that you have made 36
payments so far, what is the balance remaining on your
loan?
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