The company expects to replace the computer equipment at year 4. Determine how much the company...

The company expects to replace the computer equipment at year 4. Determine how much the company will have if they save $3,000 per month into their investment account which pays the interest rate of 3% per year, compounded semiannually?

a) Assume that interperiod cash flows earn prorated compound interest.

b) Assume there is no interperiod compounding.

Expert Solution

jeff jeffy answered 1 year ago

COMPSYS is a start-up computer company. This year, the first year of operations, the company expects...

COMPSYS is a start-up computer company. This year, the first year of operations, the company expects to reach a Sales Revenue of $750,000. The company expects its sales to grow at a rate of 15% per year. Its Cost of Goods Sold (COGS) is running at 34% of Sales Revenue, and is expected to remain at that rate. Its Selling Costs are 12% of Sales in the first year and are expected to increase by an additional 3% per year...

Q1)A Company purchased computer equipment on May 1, 2019 for $4,500. The company expects to use...

Q1)A Company purchased computer equipment on May 1, 2019 for $4,500. The company expects to use the equipment for 3 years. It has no salvage value. If financial statements are to be prepared on monthly, the company should make the following adjusting entry: * 1)Debit Depreciation Expense, $125; Credit Accumulated Depreciation, $125 2Debit Depreciation Expense, $1,500; Credit Accumulated Depreciation, $1,500 3)Debit Depreciation Expense, $1,000; Credit Accumulated Depreciation, $1,000 4)None of the above Q2))Baden Company received a check for $16,000 on...

a company estimates that it will need 116,000 in 11 years to replace a computer. If...

a company estimates that it will need 116,000 in 11 years to replace a computer. If it establishes a sinking fund by making fixed monthly payments into an account paying 3.3% compounded monthly, how much should each payment be? the amount of each payment should be $___

A company is considering whether to replace one of its construction equipment. • The existing equipment...

A company is considering whether to replace one of its construction equipment. • The existing equipment has a current cost of $15,000, which declines by 20% each year for three years. The operating cost for this equipment is $20,000 for year 1, $8,000 for year 2, and $12,000 for year 3. • The proposed equipment will cost $50,000, last five years, and has a market value that declines by 20% each year. The operating cost for the proposed equipment is...

Company A plans to replace with one of their current equipment with one of the three...

Company A plans to replace with one of their current equipment with one of the three options shown in the table. Option A B C Initial Cost 200 350 475 Annual Operation Cost 450 275 300 Salvage Value 75 60 80 Estimated Life in Year 20 20 20 Perform AW analysis to figure out which option should company A choose. The rate of return is 8% per year compounded Monthly. Please see correct answer below how do you get this?...

Bene Company is considering selling a piece of factory equipment and buying new equipment to replace...

Bene Company is considering selling a piece of factory equipment and buying new equipment to replace it. Identify two cash flows that must be considered and how they would be determined.

To determine how much money you have to invest, add up the investment for the 4...

To determine how much money you have to invest, add up the investment for the 4 projects. Multiple this total by 80% to get how much money your company has to spend. Choose the best combination of projects for the company to invest in. Show one break even analysis. Total Investment = $198420.19 Projects: #1 Invest $60000 in a 3D Printer Training and installation $10000 Revenue per year $18000 Cost per year $3000 Market Value year 11 $30000 #2 Invest...

The Rauzi Company is looking to replace an existing computer system with a new, more efficient...

The Rauzi Company is looking to replace an existing computer system with a new, more efficient system. They feel the new will increase cash flow. The new system will cost $435,000 today and have a 4 year production life. It will be depreciated using 100% bonus depreciation with an estimated salvage value of $175,000 at the end of its production life. The project will also set aside $15,000 for working capital. The old computer is currently two years old and...

ABC Company is considering the acquisition of a new piece of equipment to replace an old,...

ABC Company is considering the acquisition of a new piece of equipment to replace an old, outdated machine currently used in its business operations. The new equipment would cost $135,000 and is expected to last 9 years. The new equipment would require a repair of $25,000 in year four and another repair costing $80,000 in year eight. Purchasing this new equipment would require an immediate investment of $30,000 in working capital which would be released for investment elsewhere at the...

How much will Jones Company pay in interest each year? How much will Jones Company’s interest expense be for the first year?

Question: Determining bond prices and interest expense Jones Company is planning to issue $490,000 of 9%, five-year bonds payable to borrow for a major expansion. The owner, Shane Jones, asks your advice on some related matters. Requirements 1. Answer the following questions: a. At what type of bond price Jones Company will have total interest expense equal to the cash interest payments? b. Under which type of bond price will Jones Company’s total interest expense be greater than the...

Question