A machine has an initial cost of $30,000, labor annual cost of $37,000, maintenance annual cost of $13,000 and energy annual cost of $23,000. It has no salvage value at the end of its life and requires an overhaul of $18,000 every 5 years. The machine is expected to last 20 years. The machine is straight line depreciated, the tax rate is 39.5%, and the interest rate is 6%. Calculate before and after tax cash flows

Q: A company is planning to purchase a machine that will cost $54,000 with a six-year life and no…

A: Payback period refers to the time period that is required to recover the initial cost. With the help…

Q: A contractor has purchased a wheel loader for $115,000 and plans to use it 2,000 hours per year. The…

A:

Q: A company is considering to acquire a new machinery. It costs ₱90,000 with transportation costs of…

A: a) Calculation of depreciation per annum :       Calculation of Machinery cost = 90000 + 6000 + 9000…

Q: A highway construction firm purchased a particular earthmoving machine 3 years ago for $125,000. The…

A: The annual cash flows of existing method are as follows: Resultant table:

Q: A machine purchased three years ago for $311,000 has a current book value using straight-line…

A: The decision for keeping a machine and replacing the machine is taken by the company by comparing…

Q: GoHigher is planning to purchase a machine that will cost $24,000. It has a six-year life with no…

A: The payback period is the number of periods in which the initial investment will be recovered.  It…

Q: a proposal is made to spend $105,000 to refurbish several pallatizing systems in a distribution…

A: Step1:Introduction Present Worth of the proposal is evaluated through NPV of capital budgeting…

Q: A business firm is contemplating to purchase new equipment. The purchase price is 60,000 and its…

A: The question pertains to the concept of capital budgeting tools and time value of money and has been…

Q: Company is planning to purchase an new machine for the amount of P90,000, with an estimated useful…

A: In bailout period we consider the cash flow and salvage value and time period required to recover…

Q: The equipment has a delivered cost of $58,000. An additional $4,000 is required to install the new…

A:

Q: A CNC machine costs $220,000. A facility purchases one and plans to use it for 12 years, at which…

A: Double declining depreciation rate = Straight line depreciation rate x 2 = (100/12 years) x 2 =…

Q: A machinery that costs $100,000, has a service life of 5 years and a salvage value of $10,000 at the…

A: Initial Investment  $   1,00,000.00 Salvage Value  $      10,000.00 Tax Rate  30% MARR After…

Q: A machine costs RO 40,000 with a salvage value of RO 20,000. The expected life of the machine is…

A: Under units of production method, depreciation is calculated on the basis of units produced during…

Q: A new engine was installed by a textile plant at a cost of P388,000 and projected to have a useful…

A: First cost (F) = P 388000 n = 12 years Salvage value (S) = P 37000 r = 14% compounded semiannually =…

Q: A manual press costs $16,000, and it will be scrapped after 10 years. Compute the depreciation and…

A: Depreciation: It refers to a gradual decrease in the fixed asset’s value because of obsolescence,…

Q: A $25,000 machine that has been used for one year has a salvage value of $16,000 now, which will…

A: Sunk cost is the cost already incurred and is not relevant, whereas relevant cost are relevant for…

Q: A construction company has purchased a motor for P20,000 and a generator for P8,000 to produce its…

A: Depreciation is charged on fixed tangible asset to show the asset on true and accurate value. It is…

Q: A die-cutting machine was purchased three years ago for $450,000. The useful life of the equipment…

A: Calculation of after tax cash inflow on sale of old machine: Cost of old machine…

Q: A contractor has a 4-year concrete mixer whose first cost was $6,000, having 3 more years to live…

A: Annual Equivalent cost of the machine can be computed by dividing the present value of the machine…

Q: A machine costs $700,000 and is expected to yield an after-tax net income of $30,000 each year.…

A:

Q: A crane rental company has acquired a new heavy-duty crane for $260,000. The company calculates…

A: Depreciation is a non-cash expense which is incurred due to a continuous use of fixed asset.…

Q: A machine purchased three years ago for $311,000 has a current book value using straight-line…

A: Machinery costs can be classified into two domains Annual ownership costs Operating Costs Annual…

Q: EAC

A: EAC stands for the equal annum cost or the equivalent annual cost. It is the cost of the asset as…

Q: A machine purchased three years ago for $313,000 has a current book value using straight-line…

A: Solution: Particulars Keep Old Machine Purchase New machine Operating Expenses $320,000.00…

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A: Annual cost of operation = Depreciation expense + maintenance cost + operation costs

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A: The formula to compute NPV for an abandonment option as follows:

Q: A machine costs RO 40,000 with a salvage value of RO 20,000. The expected life of the machine is…

A: Given: Cost Value = RO 40,000 Salvage value = RO 20,000 So,  Depreciation per hour = Cost value -…

Q: A new absorption chiller system costs $360,000 and will save $52,500 in each of the next 12 years.…

A:

Q: A machine with a purchase value of (150,000) dollars and the useful life of the machine is 7 years.…

A: Deprecation is that amount which is charge on assets every year after put to use due to wear and…

Q: If the machine is purchased, annual revenues are expected to be $100,000 and annual operating…

A: Pay back period is number of years required to recover initial investment of machine.

Q: A 2-ton hydraulic press is needed to add to production. This equipment has an initial purchase and…

A: Initial Purchase and Installation Cost 190000         Yearly Operation Cost 1000…

Q: The initial cost of the machine including its installation is 930,000. The expected life of the…

A: Declining Balance Method: It is an  accelerated depreciation system to  record  larger depreciation…

Q: Eastern corporation replace an old vibratory finishing machine and purchased new machine for $…

A: Net present value means the difference between the present value of cash inflow and present value of…

Q: A machine purchased three years ago for $313,000 has a current book value using straight-line…

A: Keep old machine Purchase new Machine Annual Operating expense $32000 $9000 x No. of years 10…

Q: A new absorption chiller system costs $360,000 and will save $52,500 in each of the next 12 years.…

A: Net present worth approach is a quantitative analysis tool that helps in evaluating the investment…

Q: A crane rental company has acquired a new heavy-duty crane for $300,000. The company calculates…

A: Depreciation expense refers to the fall in the value of the asset due to passage of time, wear and…

Q: A firm has invested $60,000 in machinery with a 5-year useful life. The machinery will have no…

A: Given information: Initial investment amount is $60,000 Annual benefits amounted to $15,000 for 5…

Q: Esteez Construction Company has an overhead crane that has an estimated remaining life of 7 years.…

A: As per cash flow approach:   The company should use the old crane because the annual equivalent cost…

Q: A new machine costs $100,000 and is expected to last 10 years. At the end of 10 years, the salvage…

A: Calculation of depreciation percentage :- The straight line depreciation rate  = 1/10 = 10% per…

Q: The Darlington Equipment Company purchased a machine 5 years ago at a cost of $85,000. The machine…

A: NPV NPV is a capital budgeting tool to decide on the capital project whether it should be accepted…

Q: A contractor can buy dump trucks for ₱ 800,000 each or rent them for ₱ 1,200 per truck per day. The…

A: Solution- (A)-EAC=NPV/At,rwhereA=The present value of an annuity factort=Number of periodsr=Interest…

Q: A machine purchased three years ago for $309,000 has a current book value using straight-line…

A: First of all, the cost of old machinery is sunk cost and no more relevant for our calculations. The…

Q: The first cost of a machine is $375,000 with a 7 years life. Annual interest rate is 20% and the…

A: Depreciation means a fall in the value of a tangible asset due to wear and tear over a period of…

Q: The Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of…

A: The question is related to Capital Budgeting amd the problem is of replacement decision.

Q: The initial cost of an evaporative crystallizer including its installation is Php 930,000. The…

A: solution given Initial cost 930000 Cost of dismantling 22000 Salvage value 66000…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.