Computing Straight-Line and Double-Declining-Balance Depreciation

On January 2, Haskins Company purchases a laser cutting machine for use in fabrication of a part for one of its key products. The machine cost $120,000, and its estimated useful life is five years, after which the expected salvage value is $7,500. Compute depreciation expense for each year of the machine's useful life under each of the following depreciation methods: Round answers to the nearest whole number, when applicable.

a. Straight-line

Year 1 $Answer

Year 2 $Answer

Year 3 $Answer

Year 4 $Answer

Year 5 $Answer

b. Double-declining-balance

Year 1 $Answer

Year 2 $Answer

Year 3 $Answer

Year 4 $Answer

Year 5 $Answer

A firm with a 14% WACC is evaluating two projects for this year’s capital budget. After-tax cash flows, including depreciation, are as follows:

PROJECT A: year 0 = -$6000 | year 1 = $2000 | year 3 = $2000 | year 4 = $2000 | year 5 = $2000

PROJECT B: Year 0 = -$18,000 | Year 1 = $5600 | Year 2 = $5600 | year 3 = $5600 | year 4 = $5600 | year 5 = $5600

a.Calculate NPV, IRR, MIRR, payback, and discounted payback for each project.

b.Assuming the projects are independent, which one(s) would you recommend?

c.If the projects are mutually exclusive, which would you recommend?

d.Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?

Below are the expected cash flows and interest rates for the next nine years. Cash flows will occur at the end of the nominated years.

What is the net present value (NPV) of your proposed expansion into the Canada? Assume that the cash flows after year 0 occur at the end of each year. The required rate of return is 15.4%. (Round to nearest penny) Year 0 cash flow = -860,000 Year 1 cash flow = -110,000 Year 2 cash flow = 420,000 Year 3 cash flow = 470,000 Year 4 cash flow = 430,000 Year 5 cash flow = 460,000

Based on the following data for the current year, what is the number of days' sales in receivables? Assume 365-Day year.

Round your answer up to the nearest whole day.

a.31

b.74

c.67

d.140

economics question

"Potential projects A and B have the following cash flows. Use i = 12.3% annual rate compounded annually. Enter the Net Present Worth (NPW) of the preferred project. If neither project should be selected, enter 0.
Project A
Year 0: -$5,600
Year 1: $3,100
Year 2: $2,200
Year 3: $700
Project B
Year 0: -$4,300
Year 1: $3,000
Year 2: $2,200
Year 3: $400"

1. NH CableSource purchased a depreciable asset on January 1, 2013 at a cost of $500,000. The asset is expected to have a salvage value of $75,000 at the end of its five-year useful life. The asset will produce 100000 parts at 25000 year 1, 20,000 year 2, 15,000 year 3, 20,000 year 4, 20,000 in year 5. Show the depreciation entry for year 3 using the straightline method of Depreciation. What is the book value at the end of year 3.

1. The following are the spot interest rates for 1- and 2-year fixed income securities.

Spot 1 Year           Spot 2 Year           Forward 1Year   (1 year maturity)                                                                                      

Treasury                            3.0%                         4.75%                                        x

BBB Corporate Debt         7.5%                         9.15%                                        y

1. Calculate the value of x (the implied forward rate on 1-year maturity Treasury at the end of the year) and the value of y (the implied forward rate on 1 year maturity BBB corporate debt at the end of one year).

Your company has an opportunity to invest in a project that is expected to result in after-tax cash flows of $20,000 the first year, $22,000 the second year, $25,000 the third year, -$8,000 the fourth year, $32,000 the fifth year, $38,000 the sixth year, $41,000 the seventh year, and -$6,000 the eighth year. The project would cost the firm $90,200. If the firm's cost of capital is 17%, what is the modified internal rate of return?

Question 29 options: