Business

AccountingQ&A Librarya. A new operating system for an existing machine is expected to cost $520,000 and have a useful life of six years. The system yields an incremental after-tax income of $150,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000.b. A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation. Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)Question

**a.** A new operating system for an existing machine is expected to cost $520,000 and have a useful life of six years. The system yields an incremental after-tax income of $150,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000.**b.** A machine costs $380,000, has a $20,000 salvage value, is expected to last eight years, and will generate an after-tax income of $60,000 per year after straight-line depreciation.

Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) **(Use appropriate factor(s) from the tables provided.)**

Tagged in

Find answers to questions asked by student like you

Q: Sheridan Company has had 4 years of record earnings. Due to this success, the market price of its 45...

A: Stock dividends: Stock dividends are the number of shares issued by a company to the existing shareh...

Q: Uneven Cash Flows; NPV; Sensitivity Analysis MaxiCare Corporation, a not-for-profit organization, sp...

A: NPV is the Net Present value of the investment i.e. the present value of the expected benefit. IRR i...

Q: David Kelley is considering the implementation of an incentive wage plan to increase productivity in...

A: Definition and Goal Accomplishment Plan:Incentive wage is the income earned by the employees in case...

Q: At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing o...

A: Underapplied overhead:When there is a debit balance in the manufacturing overhead account during the...

Q: I don't understand this question either. Flowers Inc. has both common and preferred stock. There...

A: When a company has non-cumulative preferential stock, it means that whenever a company distributes d...

Q: Mary Potts arrived at her stored on the morning of January 29, she found empty shelves and display r...

A: The perpetual inventory method and periodic inventory method are the methods used to count the quant...

Q: O 3Depreciation calculation methods Millco, Inc., acquired a machine that cost $1,200,000 early in 2...

A: a.Calculate depreciation expense:Annual Depreciation = (Cost - Salvage Value) / Expected useful life...

Q: Zenon Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day...

A: Flexible Budget: The flexible budget is a budget which modifies itself as per the variations in the ...

Q: Southwest Corporation issued bonds with the following details: Face value: $700,000 Inter...

A: Face value of the bond= $700,000Bonds were issued at $103 (103% of par)The Cash received on bond iss...