Calculate the capitalized cost of an equipment maintained at a rate of 6% every year for $10,000, replaced every 3 years for $25,000 at the same rate, and bought for $110,500.
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A: Initial cost (C) = P 100000 n = 5 years r = 12% Depreciation = 100000 / 5 = P 20000
Calculate the capitalized cost of an equipment maintained at a rate of 6% every year for $10,000, replaced every 3
years for $25,000 at the same rate, and bought for $110,500.
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- Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
- For each of the following transactions, state whether the cost would be capitalized (C) or recorded as an expense (E). A. Purchased a machine, $100,000; gave long-term note B. Paid $600 for ordinary repairs C. Purchased a patent for $45,300 cash D. Paid $200,000 cash for addition to old building E. Paid $20,000 for monthly salaries F. Paid $250 for routine maintenance G. Paid $16,000 for major repairsReferring 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?Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
- The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?A project capitalized for ₱25,000 invested in depreciable assets will earn a uniform, annual income of ₱29647 in 10 years. The cost for operation and maintenance total ₱5,000 a year, and annual taxes and insurance will cost 5% of the investment. The company expects its capital to earn 14% before income taxes.Using the Annual Worth method, what is the total annual cost of the project?An initial capital of $25,000 was put up for a new project that will produce an annual income of $8,500 for 5 years and then will have a salvage value of $1,000 at that time. Annual expenses for its operation and maintenance amounts to $750. If money is worth 9% compounded annually, determine the project's ERR (in %, round-off to 5 decimal places).
- If the current value of a chemical plant is $ 800 thousand, its scrap value is $ 50 thousand, the service life is 8 years, the interest rate is 7%, the depreciation value and book value for each year,a) Calculate using the accumulated fund method.b) Show depreciation and book value changes by years on the chart.The original cost for a distillation tower is $ 24,000 and the lifetime of the tower is estimated at 8 years. The accumulated fund method was used to determine the depreciation amount and the annual interest rate of the depreciation fund is 6 percent. If the scrap value of the distillation tower is $ 4000, determine the book value of the equipment at the end of the 5th year.A project capitalized for ₱47,000 invested in depreciable assets will earn a uniform, annual income of ₱24523 in 10 years. The cost for operation and maintenance total ₱7,000 a year, and annual taxes and insurance will cost 3% of the investment. The company expects its capital to earn 10% before income taxes.What is the rate of return of the project?