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

A plant asset with a cost of $270,000, estimated life of 5
years, and residual value of $45,000, is depreciated by
straight-line method. This asset is sold for $190,000 at the end of
the 2nd year. a) Prepare the entry for depreciation for the year?
b) Prepare the entry for the sales of the asset.

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...

Monty Corporation purchased machinery on January 1, 2022, at a
cost of $270,000. The estimated useful life of the machinery is 4
years, with an estimated salvage value at the end of that period of
$32,000. The company is considering different depreciation methods
that could be used for financial reporting purposes.
(a)
Prepare separate depreciation schedules for the machinery using
the straight-line method, and the declining-balance method using
double the straight-line rate.
STRAIGHT-LINE DEPRECIATION
Computation
End of Year
Years
Depreciable...

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,...

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