Question
In: Economics
A manufacturer of electronic components acquires a cutting machine (CM) for $400,000. It is estimated that...
A manufacturer of electronic components acquires a cutting machine (CM) for $400,000. It is estimated that the CM will reduce operating costs by $128,000 annually since it is capable of cutting through high- thickness green ceramic ware. It will be depreciated using the MACRS method, with a recovery period of five years. The project period is six years; it is estimated that the CM will have a market value equal to 10% of its purchase price at the end of the project period. This company has an after-tax MARR of 12% and a 25% combined federal/state rate.
a.)Has this asset been correctly classified? Justify your answer (be specific). In subsequent parts, use the depreciation method and classification indicated above regardless of your conclusion.
b.)Compute the after-tax cash flows. Suppose the project ends unexpectedly at the end of the fifth year.
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
A manufacturer of electronic components acquires a cutting machine (CM) for $400,000. It is estimated that...
A manufacturer of electronic components acquires a cutting
machine (CM) for $400,000. It is estimated that the CM will reduce
operating costs by $128,000 annually, since it is capable of
cutting through high-thickness green ceramic ware. It will be
depreciated using the MACRS method, with a recovery period of five
years. The project period is six years; it is estimated that the CM
will have a market value equal to 10% of its purchase price at the
end of the...
A manufacturer of electronic components acquires a cutting machine (CM) for $400,000. It is estimated that...
A manufacturer of electronic components acquires a cutting
machine (CM) for $400,000. It is estimated that the CM will reduce
operating costs by $128,000 annually, since it is capable of
cutting through high-thickness green ceramic ware. It will be
depreciated using the MACRS method, with a recovery period of five
years. The project period is six years; it is estimated that the CM
will have a market value equal to 10% of its purchase price at the
end of the...
A machine that cost $400,000 has an estimated residual value of $40,000 and an estimated useful...
A machine that cost $400,000 has an estimated residual value of
$40,000 and an estimated useful life of four years. The company
uses double-declining-balance depreciation. Required:
1. Calculate the machine's depreciable cost.
2. Calculate the machine's depreciation expense for each
year.
3. Calculate the machine's accumulated depreciation and book
value at the end of each year.
A manufacturer of electronic components is interested in determining the lifetime of a certain type of...
A manufacturer of electronic components is interested in
determining the lifetime of a certain type of battery. A sample, in
hours of life, is as follows 123, 116, 122, 110, 175, 126, 125,
111, 118, 117.
Calculate: Sample Mean, Sample Median, 20% trimmed Mean,
Quartiles: Q1, Q2 and Q3
Interquartile range: IQR = Q3 –Q1 , Lower bound = Q1 - 1.5(Q3
- Q1), Upper bound = Q3 + 1.5(Q3 - Q1).
Maximum, Minimum, Range = Max...
Equipment for immersion cooling of electronic components has an installed value of $182,000 with an estimated...
Equipment for immersion cooling of electronic components has an
installed value of $182,000 with an estimated salvage value of
$40,000 after 15 years. For years 2 and 10, use DDB book
depreciation to determine: (a) the depreciation charge, and (b) the
book value.
I want an explanation for the steps
The following represents the financial information of Fabriz Corporation, a manufacturer of electronic components, for two...
The following represents the financial information of Fabriz
Corporation, a manufacturer of electronic components, for two
months:
March
April
Sales
540,000
500,000
Costs:
Process inspection
4,400
3,960
Scrap
3,900
4,860
Quality training
37,800
31,000
Warranty repairs
9,200
9,800
Testing equipment
16,000
16,000
Customer complaints
8,200
7,800
Rework
36,000
47,000
Preventive maintenance
30,000
20,000
Materials inspection
15,000
10,200
Field testing
19,200
...
The Protek Company is a large manufacturer and distributor of electronic components. Because of some successful...
The Protek Company is a large manufacturer and distributor of
electronic components. Because of some successful new products
marketed to manufacturers of personal computers, the firm has
recently undergone a period of explosive growth, more than doubling
its revenues during the last two years. However, the growth has
been accompanied by a marked decline in profitability and a
precipitous drop in the company’s stock price.
You are a financial consultant who has been retained to analyze
the company’s performance and...
Cox Electric makes electronic components and has estimated the following for a new design of one...
Cox Electric makes electronic components and has estimated the
following for a new design of one of its products:
Fixed Cost = $3,000
Material cost per unit = $0.15
Labor cost per unit = $0.10
Revenue per unit = $0.65
Production Volume = 12,000
Per-unit material and labor cost together make up the variable cost
per unit. Assuming that Cox Electric sells all it produces, build a
spreadsheet model that calculates the profit by subtracting the
fixed cost and total...
Cox Electric makes electronic components and has estimated the following for a new design of one...
Cox Electric makes electronic components and has estimated the
following for a new design of one of its products:
Fixed Cost = $15,000
Material cost per unit = $0.15
Labor cost per unit = $0.10
Revenue per unit = $0.65
Production Volume = 12,000
Per-unit material and labor cost together make up the variable
cost per unit. Assuming that Cox Electric sells all it produces,
build a spreadsheet model that calculates the profit by subtracting
the fixed cost and total...
A random sample of 300 electronic components manufactured by a new machine is tested and 9...
A random sample of 300 electronic components manufactured by a
new machine is tested and 9 are found to be defective. The parts
using the old machine have a true defective proportion of four
percent. Does this sample provide evidence that the true defective
proportion for the new machine is less than the old machine’s at
the 5% significance level? Justify using a hypothesis test! Be sure
to state you Ho and Ha, your test statistic and p-value, your
decision...
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