A machine costing $215,600 with a four-year life and an estimated $20,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 489,000 units of product during its life. It actually produces the following units: 121,500 in 1st year, 123,000 in 2nd year, 121,500 in 3rd year, 133,000 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.)

Compute depreciation for each year (and total depreciation of all years combined) for the machine under each Unit of production and Compute depreciation for each year (and total depreciation of all years combined) for the machine under each Double-declining-balance.

Calculating Operating Cash Flows (Direct Method)

Calculate the cash flow for each of the following cases.

a. Cash paid for advertising:

b. Cash paid for income taxes:

c. Cash paid for merchandise purchased:

Exercise 8-9A Computing and recording straight-line versus double-declining-balance depreciation LO 8-2, 8-3

At the beginning of Year 1, Copland Drugstore purchased a new computer system for 85,000. It is expected to have a five-year life and a $15,000 salvage value.

Required
a. Compute the depreciation for each of the five years, assuming that the company uses

(1) Straight-line depreciation. (I had 7000 as the answer but it is incorrect)

2) Double-declining-balance depreciation. (Year 4 and 5 I have incorrect)

1. Suppose you have an investment that costs $80,000 at the beginning of the project, and it generates $30,000 a year for four years in positive cash flows. The cost of capital is 12%. The IRR of the project is 18.45% and the NPV is about $11,120. The IRR model assumes that at the end of the first year you can invest the $30,000 at ________.

a. 12.00%

b. a rate greater than the IRR

c.  rate less than the cost of capital

d. 18.45%

2. Find the Modified Internal Rate of Return (MIRR) for the following annual series of cash flows, given a discount rate of 14.00%: Year 0: -$65,000; Year 1: $25,000; Year 2: $12,000; Year 3: $12,000; Year 4: $12,000; and, Year 5: $12,000.

a. About 8.35%

b. About 6.35%

c. About 9.27%

d. About 7.88%

Problem in Forecasting Interest Rates based on unbiased expectations theory:

These are the rates today (June 15, 2018) for loans of equal risk.
R1 = 2%;
R2 = 3%
R3 = 4%
R4 = 5%

A. Given this information, calculate one-year forward rate for a one-year loan beginning 6/15/19 and ending on 6/15/20

B. Calculate the two-year forward rate for a one-year loan beginning 6/15/20 and ending on 6/15/21

C. Calculate the three-year forward rate for a one-year loan beginning 6/15/21 and ending on 6/15/22

D. Calculate the two-year forward rate for a two-year loan beginning 6/15/20 and ending on 6/15/22

1. If you are offered to invest an amount of $ 100,000 in a business opportunity that expected to achieve operating cash inflow after considering taxes (net of taxes & before depreciation) in the future as follows:

Year (1) $ 32,000, Year (2) $ 35,000, Year (3) $ 40,000, & Year (4) $ 25,000

Would you accept this business opportunity if the required rate of returns is 15%?

----------------------------------

2. If you have the following information about an investment opportunity:
   1. Initial investment (cash out- required capital) is $ 500,000
   2. Expected operating cash inflows( after considering taxes) in year (1) $ 200,000, in year (2) $ 260,000, in year (3) $ 250,000, & in year (4) $ 150,000

Calculate the payback period, the net present value if the cost of capital is % 15%, & also calculate the internal rate of return?

5. Marshall-Miller & Company is considering the purchase of a new machine for $60,000, installed. The machine has a tax life of 5 years, and it can be depreciated according to the depreciation rates below. The firm expects to operate the machine for 5 years and then to sell it for $18,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 5?

If we sell at the end of year 5 for $18,500 then determine if we have a gain or a loss and the appropriate tax consequence

Explain answer and how to figure on financial calculator please

Problem 18-03

The federal corporate income tax rate is 35 percent and firms may carry-back losses for two years and carry-forward losses for 20 years. The carry-back must occur before carry-forward. A corporation breaks even in year 1, earns $27,000 in year 2, but operates at a loss of $87,000 in year 3. It earns $73,000 in year 4, breaks even in year 5, and earns $43,000 in year 6. What are the taxes paid or refunded in each year? Enter your answers as positive values. If the answer is zero, enter "0". Round your answers to the nearest dollar.