7. Charlotte Corporation has the following information pertaining to the purchase of a new piece of equipment:Cash revenues less cash expensesCost of equipmentSalvage value at the end of the 8th yearTax rateLifeCost of capital 13 percent.Required (use excel):$180,000 per year$780,000$60,00025 percent8 yearsCalculate the following assuming that depreciation expense is $160,000, $140,000, $120,000, $100,000, $80,000,$60,000, $40,000 and $20,000 for years 1 through 8, respectively:i.Calculate the after-tax cash flows for each of the eight years.ii. Calculate the after-tax payback period.iii. Calculate the accounting rate of return on average investment for year 1.iv. Calculate the net present value (NPV).V.Calculate the internal rate of return (IRR).

Approach to solving the question: Detailed explanation: Examples: Key references: General Finance

Answered: 7. Charlotte Corporation has the…

Principles of Accounting Volume 1

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Chapter11: Long-term Assets

Section: Chapter Questions

Problem 8PA: Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the...

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Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?
Harper Corporation has the following information about the purchase of a new piece of equipment: Cash revenues less cash expenses $50,000 per year Cost of equipment $130,000 Salvage value at the end of the 8th year $22,000 Increase in working capital requirements $35,000 Tax rate 25 percent Life 8 years The cost of capital is 13 percent. Required: Calculate the following assuming straight-line depreciation: Calculate the accrual accounting rate of return on original investment for…
Harper Corporation has the following information about the purchase of a new piece of equipment: Cash revenues less cash expenses $50,000 per yearCost of equipment $130,000Salvage value at the end of the 8 th year $22,000Increase in working capital requirements $35,000Tax rate 25 percentLife 8 years The cost of capital is 13 percent. Required:iii. Calculate the after-tax payback period.iv. Calculate the accrual accounting rate of return on original investment for each of the eightyears.v. Calculate the net present value (NPV).vi. Calculate the internal rate of return (IRR).
Harper Corporation has the following information about the purchase of a new piece of equipment: Cash revenues less cash expenses $50,000 per yearCost of equipment $130,000Salvage value at the end of the 8 th year $22,000Increase in working capital requirements $35,000Tax rate 25 percentLife 8 years The cost of capital is 13 percent. Required:a. Calculate the following assuming straight-line depreciation:i. Calculate the after-tax net income for each of the eight years.ii. Calculate the after-tax cash flows for each of the eight years.iii. Calculate the after-tax payback period.iv. Calculate the accrual accounting rate of return on original investment for each of the eightyears.v. Calculate the net present value (NPV).vi. Calculate the internal rate of return (IRR). b. Calculate the following assuming that depreciation expense is $24,000, $21,000, $18,000,$15,000, $12,000, $9,000, $6,000 and $3,000 for years 1 through 8, respectively:i. Calculate the after-tax cash flows for each of…
Harper Corporation has the following information about the purchase of a new piece of equipment: Cash revenues less cash expenses $50,000 per year Cost of equipment $130,000 Salvage value at the end of the 8th year $22,000 Increase in working capital requirements $35,000 Tax rate 25 percent Life 8 years The cost of capital is 13 percent. Required: Calculate the following assuming that depreciation expense is $24,000, $21,000, $18,000, $15,000, $12,000, $9,000, $6,000 and $3,000 for…
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