In: Economics

Pollution control equipment for a pulverized coal cyclone furnace is estimated to cost $270,000, 2 years from now, an additional $120,000, 4 years from now and, an additional $100,000 5years from now At i=8 % per year,what is the equivalent annual worth of the cash flow series?

The present worth = 270,000(P/F, 8%, 2) + 120,000(P/F, 8%, 4) + 100,000(P/F, 8%, 5)

= 270,000(0.8573) + 120,000(0.7350) + 100,000(0.6806)

= 231,471 + 88,200 + 68,060

= 387,731

Equivalent annual worth = 387,731(A/P, 8%, 5)

= 387,731(0.2505)

= $97,126.62

Thus, the equivalent annual worth of the cash flow series is $97,126.62

Paula Coal Company purchased equipment for $270,000 on January
2, 2021, its first day of operations. For book purposes, the
equipment will be depreciated using the straight-line method over
three years with no salvage value. Pretax financial income and
taxable income are as follows: 2021 2022 2023 Pretax financial
income $156,000 $170,000 $180,000 Taxable income 120,000 170,000
216,000 The temporary difference between pretax financial income
and taxable income is due to the use of accelerated depreciation
for tax purposes.
Required...

Franklin Electronics is considering investing in manufacturing
equipment expected to cost $270,000. The equipment has an estimated
useful life of four years and a salvage value of $ 16,000. It is
expected to produce incremental cash revenues of $135,000 per year.
Franklin has an effective income tax rate of 30 percent and a
desired rate of return of 12 percent. (PV of $1 and PVA of $1)
(Use appropriate factor(s) from the tables
provided.)
Required
Determine the net present...

BCK company purchased new equipment with an estimated useful
life of four years. The cost of the equipment was $50,000, and the
salvage value was estimated to be $5,000 at the end of four years.
The company uses the double-declining-balance method for book
depreciation. (i) What is the amount of depreciation for the fourth
year of use? (ii) What is the book value of the asset at the end of
the third year?

You expect that you will need to replace your furnace in 6 years
at a cost of $16,939. How
much must you save, each month for 29 months, starting next
month (the same amount
each month) if your savings account pays 2.81% APR (compounded
monthly)?

You expect that you will need to replace your furnace in 5 years
at a cost of $16,447. How much must you save, each month for 14
months, starting next month (the same amount each month) if your
savings account pays 2.27% APR (compounded monthly)?

You expect that you will need to replace your furnace in 5 years
at a cost of $15,729. How much must you save today in an account
that pays 3.42% APR (compounded monthly) to exactly pay the $15,729
in 5 years?

You expect that you will need to replace your furnace in 4 years
at a cost of $15,682. How
much must you save today in an account that pays 3.58% APR
(compounded monthly) to exactly pay the $15,682 in 4 years?

Depreciation by Three Methods; Partial Years
Perdue Company purchased equipment on April 1 for $270,000. The
equipment was expected to have a useful life of three years or
18,000 operating hours, and a residual value of $9,000. The
equipment was used for 7,500 hours during Year 1, 5,500 hours in
Year 2, 4,000 hours in Year 3, and 1,000 hours in Year 4.
Required:
Determine the amount of depreciation expense for the years ended
December 31, Year 1, Year 2,...

JLMB Company owns earth moving equipment that cost ?98,000.
After 8 years, it will have estimated salvage value of ?18,000.
Compute the depreciation charge for each of the first two years and
the book value at the end of 4 years by each of the following three
methods of depreciation: a. straight line method; b.
sum-of-the-years digit method; and c. double declining balance
method.

Office equipment was purchased 6 1/2 years ago for $250,000,
with an estimated life of 8 years and a residual value of $10,000,
is now sold for $45,000 cash. (Appropriate entries for depreciation
had been made for the first six years of use.) Journalize the
following entries:
(10 points)
(a)
Record the depreciation for the one-half year prior to the sale,
using the straight-line method.
(b)
Record the sale of the equipment.

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