Should the company replace an old machine based on this information? Accurately calculate the Net Present Value (NPV) to make a recommendation.YearSavings Before Depreciation and TaxIncremental DepreciationEarnings Before TaxTax at 25%Earnings After TaxAdjustment to Add Back Depreciation01$42,000 $$(12,960) $242,000 $(43,800) $342,000 $(20,760) $456NotesTax RateDiscountRate42,000 $(13,740) $42,000 $(20,700) $42,000(10,440)25.00%10%Cost of New Machine$ (180,000)Proceeds from Sale of Old Machine$37,600Tax Benefit From Sale$5,000Annual Cash FlowsCash Flows Discounted at 10%Net Present ValueChange SignChange Sign

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Answered: Should the company replace an old…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

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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Compare between the following two (After Tax cash flow) machines using internal rate of return analysis, present worth analysis, and annual worth analysis: B/C; after tax analysis Machine (A) Machine (B) First Cost ($) 80,000 200,000 Life (years) 5 10 Annual Cost ($) 18,000 6,000 Salvage value (S) 20,000 40,000 Depreciation method SL SL Tax Rate (%) 30 30 After tax MARR (%) 10 10 Inflation 5% 5%
Required information [The following information applies to the questions displayed below.] Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. The investment costs $45,000 and has an estimated $6,000 salvage value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Choose Numerator: 1 1 Accounting Rate of Return Choose Denominator: G O
Depreciation The declining balance method is an account- ing method in which the amount of depreciation taken each year is a fixed percentage of the present value of the item. If y is the value of the item in a given year, the depreciation taken is ay for some depreciation rate a with 0< a < 1, and the new value is (1 – aly. (a) If the initial value of the item is yo, show that the value after n years of depreciation is (1 – a)"yo. (b) At the end of T years, the item has a salvage value of s dollars. The taxpayer wishes to choose a depreciation rate such that the value of the item after T years will equal the salvage value (see the figure). Show that a = 1-Vs/yo.
Which one of the following statement about diminishing balance method is NOT true? Depreciation expense is same every year Depreciation expense is different every year It is an accelerated depreciation method Depreciation expense is large in early years and less or small in later years If the straight line depreciation rate is 40% and starting book value is OMR 80,000 then what will be the double declinin balance rate? M 直 0 TOSHIBA
Using the sum-of-the-years-digits method, how much depreciation expense should Vorst record in 2020 for Asset B? a. 6,000 b. 9,000 c. 11,000 d. 12,000
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?
Use the information in Problem A-1 to solve this problem. Assume that the van is five-year property for tax purposes. Required Prepare a schedule of depreciation under MACRS. Round figures to the nearest whole dollar. PROBLEM A-1 A delivery van was bought for 18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be 2,000. Check Figure Year 3 depreciation, 3,456
Fill in the missing numbers and then ation tax shield? 5. Calculating Depreciation A piece of newly purchased industrial equipment costs $745,000 and is classified as seven-year property under MACRS. Calculate the annual depreciation allowances and end-of-the-year book values for this equipment. LO 2 6. Calculating Salyage Value Consider an asset that costs $635,000 and is
Saved Required information [The following information applies to the questions displayed below.] Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The investment costs $47,100 and has an estimated $6,600 salvage value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Accounting Rate of Return Choose Numerator: Choose Denominator: Accounting Rate of Return Accounting rate return
Which one of the following would correctly describe the net realisable value of a two year old asset? Select one alternative The original cost of the asset less two years' depreciation The cost of an equivalent new asset less two years' depreciation The amount that could be obtained from selling the asset, less any costs of disposal The present value of the future cash flows obtainable from continuing to use the asset
Based on the following information, what is the company's Unlevered FCF for the period: EBIT of $500 mm, tax rate of 20%, Depreciation and Amort of $200 mm, Capex of $250 mm and an investment of $50 mm in Net Working Capital. a. $500 mm b. $300 mm c. $650 mm d. $225 mm Please answer fast i give you upvote.
Saved Required information [The following information applies to the questions displayed below.] Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The investment costs $47,100 and has an estimated $6,600 salvage value. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Accounting Rate of Return Choose Denominator: Accounting Rate of Return %3D Choose Numerator: Accounting rate of return

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