Question
In: Accounting
ABC is considering the purchase of an $80,000 machine on january 1, 2015. It will have...
ABC is considering the purchase of an $80,000 machine on january 1, 2015. It will have a 4 year life with no estimated salvage value.$1 line depreciation will be issued. the net cash income is estimated to be $30,000/year. The hurdle rate is 12% and the income tax rate is 40% Hint: (This project is unacceptable).
1. payback ( rounded to one decimal place) is estimated to be
a. 2.1
b. 3.1
c. 4.1
d. 5.1
2. The accounting rate of return (rounded to one decimal place) is estimated to be
a. 5.5%
b. 6.5%
c. 7.5%
d. 8.5%
3. the net present value (NPV) is estimated to be
a. $(25.334)
b. $1,110
c. $(1,015)
d. $(19,260)
4 The index of probability (rounded to one decimal place) is estimated to be
a. 0.68
b. 1.14
c. 0.99
d. 0.76
5. The Internal rate of return (IRR) ( round to one decimal place) is estimated to be
a. 9.4%
b. 10.4%
c. 11.4%
d. 8.4%
Solutions
ekkarill92 answered 1 year agoRelated Solutions
A machine was acquired on January 1, 2015, at a cost of $80,000. The machine was...
A machine was acquired on January 1, 2015, at a cost of $80,000.
The machine was originally estimated to have a residual value of
$5,000 and an estimated life of 5 years. The machine is expected to
produce a total of 100,000 components during its life, as follows:
15,000 in 2015, 20,000 in 2016, 20,000 in 2017, 30,000 in 2018, and
15,000 in 2019.
Instructions
(a) Calculate the amount of depreciation to be charged
each year, using each of the...
Question 4 A machine was acquired on January 1, 2015, at a cost of $80,000. The...
Question 4
A machine was acquired on January 1, 2015, at a cost of $80,000.
The machine was originally estimated to have a residual value of
$5,000 and an estimated life of 5 years. The machine is expected to
produce a total of 100,000 components during its life, as follows:
15,000 in 2015, 20,000 in 2016, 20,000 in 2017, 30,000 in 2018, and
15,000 in 2019.
Instructions
(a) Calculate the amount of depreciation to be
charged each year, using each...
Question 4 A machine was acquired on January 1, 2015, at a cost of $80,000. The...
Question 4
A machine was acquired on January 1, 2015, at a cost of $80,000.
The machine was originally estimated to have a residual value of
$5,000 and an estimated life of 5 years. The machine is expected to
produce a total of 100,000 components during its life, as follows:
15,000 in 2015, 20,000 in 2016, 20,000 in 2017, 30,000 in 2018, and
15,000 in 2019.
Instructions
(a) Calculate the amount of depreciation to be
charged each year, using each...
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The firm expects to be able to reduce net
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3Charles Company is considering the purchase of a new machine for $80,000. The machine would generate...
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1) ABC Ltd is considering a project which will require
the purchase of a machine for RO1,000,000 at time zero, this
machine will have a scrap value at the end of its four - year life:
this will be equal to its written - down value. (25% declining
balance writing - down allowance on the machine each year).
Corporation tax, at a rate of 30% of taxable income, is payable.
ABC Ltd's required rate of return is 12%. Operating cash...
It is now January 1, 2015, and you are considering the purchase of an outstanding bond...
It is now January 1, 2015, and you are considering the purchase
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December 31, 2042.) There is a 5 years of call protection (until
December 31, 2017), after which time it can be called at 109 - That
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Curtis industries is considering the purchase of a new machine.
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5. A machine was acquired on January 1, 2018, at a cost of $80,000. The machine...
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of $80,000. The machine was originally estimated to have a residual
value of $5,000 and an estimated life of 5 years. The machine is
expected to produce a total of 100,000 components during its life,
as follows: 15,000 in 2018, 20,000 in 2019, 20,000 in 2020, 30,000
in 2021, and 15,000 in 2022.
Instructions
(a) Calculate the amount of depreciation to be
charged each year, using each of...
The management of ABC Corporation is considering the purchase of a new machine costing $430,000. The...
The management of ABC Corporation is considering the purchase of
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return is 10%. The present value factors for $1 at compound
interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751,
0.683, and 0.621, respectively. In addition to the foregoing
information, use the following data in determining the
acceptability in this situation by using the NPV methodology
calculations
Year
Income from
Operations
Net Cash
Flow
1
$100,000
$180,000...
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