company is considering the purchase of an asset which costs $56,000 and has an estimated scrap value of $9,000 after 4 years. The asset is expected to increase revenue by $20,000 a year before maintenance costs of $3,500 a year. Assuming a tax rate 42%, compute the net present value of the investment using a 6% interest rate and depreciation charges obtained from: A: the straight-line method of depreciation ($1390.20) B: the sum of years digits method of depreciation ($1887.93) C: the double declining balance method for two years followed by the straight-line method ($2330.72) Cannot use Excel.

Q: A company plans to add an additional production line at an initial cost of $ 1,250,000 that will…

A: Initial Investment  $ 12,50,000.00 Gross Savings  $ 10,00,000.00 Annual operating cost  $…

Q: A corporation expects to receive $32,000 each year for 15 years from the sale of a product. There…

A: Rate of return is the annual income in percentage earned from an investment.

Q: [The following information applies to the questions displayed below.] Peng Company is considering an…

A: Accounting rate of return is computed by dividing the annual after tax net income by the annual…

Q: A company planned to invest $200,000 to add some equipments in it's production line. This new…

A: Net Fixed Assets is the residual value of the fixed asset. If the value obtained from it is low then…

Q: Engro Incorporation wants to evaluate an acquisition of an equipment worth $200,000. Its marginal…

A:

Q: Harper Corporation has the following information about the purchase of a new piece of equipment:…

A: Given Cash revenues less cash expenses $50,000  per year Cost of equipment $130,000 Salvage value at…

Q: Antonio, Inc., has invested in new production equipment at a cost of $24,000. The equipment has an…

A: The payback period (PBP) is the amount of time that is expected to recover the investment costs…

Q: A project under consideration by PHI Inc. is summarized. The company uses straight-line…

A: Cashflows are as follows  At time 0   cash outflow = -$75000 From time 1 to 10,  net after tax cash…

Q: A company purchases a new asset for $400,000. It has a useful life of 8 years with a $80,000 salvage…

A: Explanation : Net Present value ( NPV) is that technique under capital budgeting which help for…

Q: A Company plans on an expansion project that would initially cost $750,000 and a salvage value of…

A: A) Yearly Total Cash flows   Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8…

Q: Macaron Corporation is making a $96,400 investment in equipment with a 5-year life. The company uses…

A: Lets understand the basics. Depreciation is a reduction in value of asset due to wear and tear…

Q: NUBD Co. purchase a machine for P180,000, which will be depreciated on the straight-line basis over…

A: Initial Investment = 180,000 Useful life = N = 5 SLM Depreciation Depreciation expense = Initial…

Q: Win Corporation is considering the purchase of wood cutting equipment. Data on the equipment are as…

A: Under straight line depreciation, equal amount is being charged as depreciation in every year of…

Q: Carper Company is considering a capital investment of $390,000 in additional productive facilities.…

A: Capital Budgeting: It is the planning process used to determine whether an organization invests for…

Q: A corporate expects to receive $34,442 each year for 15 years if a particular project is undertaken.…

A: Initial investment (X) = $114290 Annual cash inflow = $34442 Annual expenses = $7570 Depreciation =…

Q: Company ABC is considering a new project that will require $1.5 million on new equipment at the…

A:

Q: rizona Company is considering an investment in new machinery. The annual incremental…

A: NPV is an investment appraisal method. It is the estimated increase in wealth of shareholders of the…

Q: Gillespie Gold Products, Inc., is considering the purchase of new smelting equipment. The new…

A: ATCF is after tax cash flow is the measurement o0f the performance of the company, that shows the…

Q: A division is considering the acquisition of a new asset that will cost $730,000 and have a cash…

A: Given the following information Cost of the new asset: $730,000 Annual Cashflow: $281,500 Life of…

Q: XYZ Company plans to invest $1 million in a new plant which is expected to produce a uniform annual…

A: Net Present Value: It is the difference  between the current worth of money inflows  and outflows…

Q: company is considering a new project whose data are shown below. The required equipment has a 3-year…

A: Cost of equipment = $70000 Depreciation for year 4 = $70000×7% = $4900

Q: Peng Company is considering an investment expected to generate an average net income after taxes of…

A: Calculate annual average investment: Annual average investment = (Initial investment + salvage…

Q: A company purchases an industrial laser for $166,000. The device has a useful life of 4 years and a…

A: After tax cash flow (ATCF) = Taxable income - Tax + Depreciation

Q: The Hills Company, a calendar year company, purchased a new machine for P280,000 on January 1.…

A: Solution: Annual net income from investment = Investment amount * ARR = P280,000 * 15% = P42,000

Q: A potential investment has a cost of $542,500 and a useful life of 7 years. Annual cash sales from…

A: 1) Calculation of NPV (in case of investment before tax):   Year 1 2 3 4 5 6 7   Sales 219202…

Q: Your company is considering a new project that will require $825,000 of new equipment at the start…

A: Calculation of PV of Tax Benefits from Depreciation:The PV of tax benefits from depreciation is…

Q: Oriole Company is considering a capital investment of $196,000 in additional productive facilities.…

A: Cash flow states the cash inflow and cash outflow of the company. It is represented in the cash flow…

Q: CC Company invested in a project which required an investment of P10,000 with a salvage value of…

A: GIVEN   CC Company invested in a project which required an investment of P10,000 with a salvage…

Q: your company is considering a new project that will require $10,000 of new equipment at the start of…

A: Annual depreciation =(Cost-Salvage value)/Useful Life =(10000-3000)/5 =$1400/year

Q: An asset was purchased for P66,000. The asset is expected to last for 6 years and will have a…

A: Net income = income before tax - tax = 7200- 7200*0.30 = 5040

Q: The NUBD Co. acquired a new machine for P160,000 which will be depreciated on a straight-line basis…

A: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life…

Q: A company is considering a new project whose data are shown below. The required equipment has a 3-…

A: Given information, Sales =$52,000 Equipment cost =$70,000 Operating costs=$25,000 Tax rate =35%

Q: A company is planning to augment its production capacity through equipment additions that will cost…

A: Additional cost (C) = $350000 Increase in income (x) = $250000 Increase in costs (y) = $150000 n = 5…

Q: educe its salary cash expense by $2,000,000 per year. The system has a five-year life, it will be…

A: Net Present Value: It is a measure of profitability in absolute dollar terms and is estimated by…

Q: This question is based on the following in formation: An investment is Machinery costing P 250,000…

A: Annual tax shield will the tax saved on depreciation of assets. Annual Depreciation =(Cost of…

Q: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,…

A: NPV means PV of net benefits arises from the project in the future. It can be simple calculated by…

Q: The possibility of acquiring new machinery at a cost of $ 40,000 is being evaluated, which may be…

A: Solution-Straight line depreciation is the most basic method of depreciation. It includes equal…

Q: The Lumber Yard is considering adding a new product line that is expected to increase annual sales…

A: Depreciation Tax shield = Tax rate x Depreciation Expense Depreciation Expense = Cost - Salvage…

Q: An asset with a first cost of $250,000 and a 5-year recovery period is subject to MACRS…

A: Answer has been given in the next sheet.

Q: Bert Corporation is considering an investment in equipment for $150,000. Data related to the…

A:

Q: A corporate expects to receive $37,399 each year for 15 years if a particular project is undertaken.…

A:

Q: Denver Company buys a machine for $65,000 that has an expected life of 4 years and no salvage value.…

A: Answer:   9.54%

Q: What is the payback period in years approximated to two decimal points? Group of answer choices 2.63…

A: Equipment Cost = $60000 Annual Depreciation (Straight Line Method) = (Cost - Salvage Value) / Useful…

Q: A corporate expects to receive $35,900 each year for 15 years if a particular project is undertaken.…

A: Net present worth (or net present value) is a capital budgeting approach that evaluates the…

Q: as invested $50,000 in equipment with a 5-year useful life. The machinery will have a salvage value…

A: IRR stands for Internal rate of return refers to the concept that evaluates the profitability factor…

Q: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,…

A: a) The computation of NPV of abandonment for year 1: Hence, the NPV is -$909.09. Working note:

Q: A firm has earnings of $8,000 before interest, depreciation, and taxes. A new piece of equipment is…

A: Depreciation is the reduction in the monetary value of tangible assets over time due to old and…

Q: An asset was purchased for P66,000. The asset is expected to last for 6 years and will have a…

A: Accounting rate of return(ARR), one of the techniques of capital budgeting is defined as the…

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.