Question
In: Accounting
A company is considering using the compound interest method of depreciation for a piece of equipment...
A company is considering using the compound interest method of depreciation for a piece of equipment costing $100,000, having an estimated AATCF in year one of $25,000, and an estimated IRR of 27% which positively compares to the target rate of return of 12%. The compound interest method of depreciation that would be reported for year one would be:
Group of answer choices
$13,000 positive
$13,000 negative
$2,000 negative
$2,000 positive
Solutions
ekkarill92 answered 2 years agoRelated Solutions
A company is considering the purchase of a piece of equipment that would cost $380,000 and...
A company is considering the purchase of a piece of equipment
that would cost $380,000 and would last for 8 years. At the end of
8 years, the equipment would have a salvage value of $97,500. The
equipment would provide annual cost savings of $85,000. The company
requires a minimum pretax return of 12% on all investment projects.
(Ignore income taxes.)
Required:
Provide your Excel input and the final net present value amount
you calculated. (If a variable is not...
TA, Inc. is considering replacing a piece of old equipment with a piece of new equipment....
TA, Inc. is considering replacing a piece of old equipment with
a piece of new equipment. Details for both are given below:
Old Equipment
New Equipment
Current book value
$1,500,000
Current market value
$2,500,000
Acquisition cost
$6,200,000
Remaining life
10 years
Life
10 years
Annual sales
$350,000
Annual sales
$850,000
Cash operating expenses
$140,000
Cash operating expenses
$500,000
Annual depreciation
$150,000
Annual depreciation
$620,000
Accounting salvage value
$0
Accounting salvage value
$0
Expected salvage value after 10 years
$240,000
Expected...
TA, Inc. is considering replacing a piece of old equipment with a piece of new equipment....
TA, Inc. is considering replacing a piece of old equipment with
a piece of new equipment. Details for both are given below:
Old Equipment
New Equipment
Current book value
$1,800,000
Current market value
$2,500,000
Acquisition cost
$6,200,000
Remaining life
10 years
Life
10 years
Annual sales
$350,000
Annual sales
$850,000
Cash operating expenses
$140,000
Cash operating expenses
$500,000
Annual depreciation
$180,000
Annual depreciation
$620,000
Accounting salvage value
$0
Accounting salvage value
$0
Expected salvage value
$240,000
Expected salvage value
$750,000...
Bene Company is considering selling a piece of factory equipment and buying new equipment to replace...
Bene Company is considering selling a piece of factory equipment
and buying new equipment to replace it. Identify two cash flows
that must be considered and how they would be determined.
a) A company is considering a new piece of equipment that will save them $1818 per...
a) A company is considering a new piece of equipment that will save
them $1818 per year. The machine costs $9040. After 8 years in
service the machine will have to be replaced. It has no salvage
value at the end of eight years. Given a MARR of 10.9% per year.
What is the present worth of the machine?
b) Sofia an intern from an engineering school finds an
alternative manufacturer who offers the same piece of equipment
with a...
ABC Company is considering the acquisition of a new piece of equipment to replace an old,...
ABC Company is considering the acquisition of a new piece of equipment to
replace an old, outdated machine currently used in its business operations.
The new equipment would cost $135,000 and is expected to last 9 years. The
new equipment would require a repair of $25,000 in year four and another
repair costing $80,000 in year eight. Purchasing this new equipment would
require an immediate investment of $30,000 in working capital which would
be released for investment elsewhere at the...
6) Company is considering the purchase of a piece of equipment in '12. The projected cost...
6)
Company is considering the
purchase of a piece of equipment in '12.
The projected cost of the equipment is
50,000
The equipment will be depreciated via the MACRS - 5
year life
This equipment is expected to generate the
following economics:
Revenue for first year will be
45,700
Revenue will increase by
1.0%
per year thereafter
Expenses for first year will be
29,700
Expenses will decrease by
1.0%
per year thereafter
Company's Capital Structure is as follows:...
A company is considering the purchase of a major piece of equipment for its manufacturing plant....
A company is considering the purchase of a major piece of
equipment for its manufacturing plant. The project would cost $22m
in initial investment and would result in cost savings, before tax,
of $3.25m per year for five years. The equipment could be sold for
$4.5m at the end of the five years. The equipment would also result
in an increase in NWC of $500,000, which will be recovered at the
end of the project. The company’s CCA rate is...
A company is considering the purchase of a major piece of equipment for its manufacturing plant....
A company is considering the purchase of a major piece of
equipment for its manufacturing plant. The project would cost $22m
in initial investment and would result in cost savings, before tax,
of $3.25m per year for five years.
The equipment could be sold for $4.5m at the end of the five
years. The equipment would also result in an increase in NWC of
$500,000, which will be recovered at the end of the project.
The company’s CCA rate is...
Understanding Compound Interest Be sure to show your work. Using the simple interest method calculate total...
Understanding Compound Interest
Be sure to show your work.
Using the simple interest method calculate total
interest income for two years, given the following information: (2
points)
Principal amount = $12,500.00
Annual Interest rate = 10%
After two years: Total interest income = [
]
Using the simple interest method calculate total
interest income for three years, given the following information:
(2 points)
Principal amount = $30,000.00
Annual Interest rate = 12%
After three years: Total interest income = [...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- PART A A student wants to purchase an investment property that can generate sufficient cash flow...
- Complete the MPS record below for a single item. (Enter your responses as integers. A response...
- We can utilize potentially high bandwidth in one of the two ways: broadband and baseband modes....
- The Pinewood Furniture Company produces chairs and tables from two resources, labor and wood. The company...
- Wasabi Pte Ltd makes separate journal entries for all cost accounting-related activities. It uses a standard...
- Nordic Industrial Park: bridging distance across international markets When a resource-constrained firm enters a high-distance market,...
- Question d) Write the regular expression statement that will match a string that starts with the...
ADVERTISEMENT