Question
In: Economics
A wood products company has decide to purchase new logging equipment for $100,000 with a trade...
A wood products company has decide to purchase new logging
equipment for $100,000 with a trade in of its old equipment. The
old equipment has a BV of $10,000 at the time of the trade in. The
new equipment will be kept for 10 years before being sold. It’s
estimated SV at the time is expected to be $5,000. Using the SL
method, the BV at the end of the despreciable life is?
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
Wood Products Company would like to purchase a computerized wood lathe for $100,000. The machine is...
Wood Products Company would like to purchase a computerized
wood lathe for $100,000. The machine is expected to have a life of
5 years, and a salvage value of $5,000. Annual maintenance costs
will total $20,000. Annual cash receipts resulting from this
machine are predicted to be $45,000. The company’s required rate of
return is 15 percent.
Use Excel to calculate the net present value. (7.2)
Use Excel to calculate the internal rate of return. (7.3)
Based on your answer...
The ICan’tBelieveWhat’sHappening Company needs to decide whether or not to purchase a new piece of equipment....
The ICan’tBelieveWhat’sHappening Company needs to decide whether
or not to purchase a new piece of equipment. The equipment costs
$5.2 million (payable now). The equipment will provide before-tax
cash inflows of $2.0 million a year at the end of each of the next
four years. The equipment would be categorized as a 3-year tax
class asset according to the MACRS system. Therefore use the
following depreciation rates: 33%, 45%, 15%, and 7%, for each year
respectively from year 1 through...
The ICan’tBelieveWhat’sHappening Company needs to decide whether or not to purchase a new piece of equipment....
The ICan’tBelieveWhat’sHappening Company needs to decide whether
or not to purchase a new piece of equipment. The equipment costs
$5.2 million (payable now). The equipment will provide before-tax
cash inflows of $2.0 million a year at the end of each of the next
four years. The equipment would be categorized as a 3-year tax
class asset according to the MACRS system. Therefore use the
following depreciation rates: 33%, 45%, 15%, and 7%, for each year
respectively from year 1 through...
The Hyatt Company is trying to decide whether it should purchase new equipment and continue to...
The Hyatt Company is trying to decide whether it should purchase
new equipment and continue to make its subassemblies internally or
if production should be discontinued and the subassembly purchased
from an outside supplier. Either way production cannot continue
using the current equipment.
New equipment for producing the subassemblies can be purchased at a
cost of $400,000. The equipment would have a five-year useful life
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Alternatively,...
A company is considering the purchase of new equipment for its production area. The equipment has...
A company is considering the purchase of new equipment for its
production area. The equipment has an initial cost of $ 3,000 with
operation and maintenance costs, as well as the market liquidation
value as shown in the following table:
Year
Costs of operation
Rescue value
1
$1,000
$1,500
2
$1,700
$1,000
3
$2,400
$500
4
$3,100
$0
Determine the Optimal Economic Life of this investment, if the
MARR of the company is 12%
Comey Products has decided to acquire some new equipment having a $270,000 purchase price. The equipment...
Comey Products has decided to acquire some new equipment having
a $270,000 purchase price. The equipment will last 4 years and is
in the MACRS 3-year class. (The depreciation rates for Year 1
through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.)
The firm can borrow at a 10% rate and pays a 25% federal-plus-state
tax rate. Comey is considering leasing the property but wishes to
know the cost of borrowing that it should use when comparing
purchasing...
Comey Products has decided to acquire some new equipment having a $170,000 purchase price. The equipment...
Comey Products has decided to acquire some new equipment
having a $170,000 purchase price. The equipment will last 4 years
and is in the MACRS 3-year class. (The depreciation rates for Year
1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.)
The firm can borrow at a 5% rate and pays a 25% federal-plus-state
tax rate. Comey is considering leasing the property but wishes to
know the cost of borrowing that it should use when comparing
purchasing...
Comey Products has decided to acquire some new equipment having a $170,000 purchase price. The equipment...
Comey Products has decided to acquire some new equipment
having a $170,000 purchase price. The equipment will last 4 years
and is in the MACRS 3-year class. (The depreciation rates for Year
1 through Year 4 are equal to 0.3333, 0.4445, 0.1481, and 0.0741.)
The firm can borrow at a 5% rate and pays a 25% federal-plus-state
tax rate. Comey is considering leasing the property but wishes to
know the cost of borrowing that it should use when comparing
purchasing...
35. Net Present Value Analysis. Wood Products Company would like to purchase a omputerized wood lathe...
35. Net Present Value Analysis. Wood Products Company would like
to purchase a omputerized wood lathe for $100,000. The machine is
expected to have a life of 5 years, and a salvage value of $5,000.
Annual maintenance costs will total $20,000. Annual net cash
receipts resulting from this machine are predicted to be $45,000.
The company’s required rate of return is 15 percent.
Required:
a. Ignoring the time value of money, calculate the net cash
inflow or outflow resulting from...
35. Net Present Value Analysis. Wood Products Company would like to purchase a computerized wood lathe...
35. Net Present Value Analysis. Wood Products Company would like
to purchase a computerized wood lathe for $100,000. The machine is
expected to have a life of 5 years, and a salvage value of $5,000.
Annual maintenance costs will total $20,000. Annual net cash
receipts resulting from this machine are predicted to be $45,000.
The company’s required rate of return is 15 percent.
Required:
a. Ignoring the time value of money, calculate the net cash
inflow or outflow resulting from...
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