compute the capitalized cost of a new car worth 800,000 if it is estimated that is requires 20,000 per year to maintain and must be replaced at the same amount with a salvage value of 300,000 after 5 years if the interest rate is 12% per annum

compute the capitalized cost of a new car worth 800,000 if it is estimated that is requires 20,000 per year to maintain and must be replaced at the same amount with a salvage value of 300,000 after 5 years if the interest rate is 12% per annum

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 2P

See similar textbooks

Related questions

Q: A credit is paid as follows: a down payment corresponding to 30% of the value of the credit, 16 equa...

A: Fist we need to calculate present value of all payments starting at 3 months after by using annuity ...

Q: he following are methods of acquiring funds through long-term financing, except a. Issuing a note t...

A: Solution:- Long term financing means acquiring funds for a long period of time, generally more than ...

Q: 7. Options A. How does the price of a call option respond to the following changes, other things equ...

A: As per our guidelines we are supposed to answer only one question (if there are multiple questions a...

Q: Bulldogs Inc., a corporation that can only legally issue ordinary shares with par value, recently co...

A: Share price: Share price is the current market price of the share. It is the price of the share at w...

Q: Below you see yields on T-bills from March 15, 2022 with maturities of 4, 8, 13, 26 and 52 weeks. Us...

A: Formula for the calculation of Yield using Bamk discount yield is as below: Yield=Face Value-Purchas...

Q: By the time he turns 60, Justin (just turned age 31) wants the amount in his RRSP to have the purcha...

A: Future Value of an Ordinary Annuity (FVOA): The Future Value of an ordinary annuity refers the stre...

Q: Wade Ellis buys a car for $16,278.13. He puts 10% down and obtains a simple interest amortized loan ...

A: Given, The loan amount is $16,278.13 Down payment is 10%Rate of interest is 11.5%.

Q: Bulldogs Inc. expected to sell in October 2021 1,000 units of Dell laptops with a purchase cost per ...

A: sales volume variance: It is the variance which defines as the di...

Q: 1.) The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out- t...

A: Call Options: A call option gives the holder the right, but not the obligation to buy the underlying...

Q: he residual theory of dividends argues that dividends a. can only be distributed if there is income...

A: Solution:- Residual theory of dividends means the dividend is the residue left after meeting the cap...

Q: TNT Construction borrowed $150,000 at 7.26% compounded annually and signed a contract with the provi...

A: Solution:- When an amount is borrowed, the borrower has the option whether to repay it in lump sum o...

Q: Php 5,000,000 with an estimated s or machine hours of about 25,000 hours. The expecte e is Php 200,0...

A: Depreciation is the reduction in the value of assets that are being used and depreciation depends on...

Q: (Net present value calculation) Big Steve's, makers of swizzle sticks, is considering the purchase o...

A: Investment amount = $90,000 Annual cash inflow = $17,000 Period = 9 Years

Q: A project has initial costs of $1,000 and subsequent cash inflows of $700, 200, 200 and 200. The com...

A: Since you have posted a question with multiple sub parts, we will be solving first 3 sub parts for y...

Q: You just leased a Honda Civic that sells for $25,350. The terms of your lease you to make 60 payment...

A: The payment are done monthly that includes the interest and payment of the loan.

Q: Bulldogs Inc. uses Additional Funds Needed as a plug item. If the company had forecast its additiona...

A: The retention ratio is calculated as ratio of retained earnings and net income for the year

Q: Bulldogs Inc. is considering whether to pursue a restricted or relaxed current asset investment poli...

A: EBIT = P 40000 Interest rate = 10% Fixed assets = P 200000 Sales = P 500000

Q: True or false: the investor will be eligible to receive the dividends when he/she buy the company st...

A: Meaning of Dividend It is a distribution of stock or cash to the shareholders of a company. Basical...

Q: We are considering the effects of starting early or late to save for retirement. Assume that each ac...

A: Future Value $ 9,50,000.00 Interest Rate 6% Time for Graduation 33 Time to Retirem...

Q: Sixty monthly deposits are made into an account paying 8% nominal interest compounded monthly. If th...

A: Payment per period can be calculated using PMT function in excel. PMT(rate, nper, pv, [fv], [type]...

Q: A В D E F 1 A C D E 2 1 Market Capitalization, in millions 3 YUM ZTS ΑAPL Market (OEX) 4 3 31/01/18 ...

A: Stock prices are based on market factors due to which price level of stocks fluctuate on a regular b...

Q: Which of the following pairs of financial statement analysis tool will be given more emphasis by a f...

A: Solution:- Granting trade credit or selling on account to a new client are short term decisions and ...

Q: What are the four different markets in a foreign exchange market

A: There are different types of foreign exchange markets. This depends on the underlying characteristic...

Q: Consider the borrowing rates for Parties A and B. A wants to finance a $100,000,000 project at a fix...

A: Swap: It is an agreement where principal amount of a loan and the interest in one currency for the...

Q: Bridgette Inc. maintains a cash buffer for unexpected cash outlays for the year amounting to 3,000. ...

A: Unexpected annual cash outlay is 3,000 Transaction cost per transaction is P15 Annual interest rate ...

Q: A man invested P50,000 now for the college education of his 2-year old son. If the fund earns 14% ef...

A: Future value can be calculated using FV (rate, nper, pmt, [Pv], [type]) Rate The interest rate Nper...

Q: (DuPont analysis) Triangular Chemicals has total assets of $90 million, a return on equity of 37 per...

A: ROE = Profit margin * Equity multiplier * Total asset turnover 0.37 = 0.046 * 2.97 * Total asset tur...

Q: What deposit made at the beginning of each month will accumulate to P120,000 at 8% compounded semi-a...

A: Future Value = P 120,000 Interest Rate = 8% compounded semi-annually Time Period = 10 Years

Q: he following is true? a. High assets turnover is being reflected by inefficiencies present in the m...

A: Company provides cash discounts to the customers to increase the sales and due to this amount blocke...

Q: The annual returns of a stock and the risk-free interest rate are given as follows: Year 2010 2011 2...

A: The annual returns of a stock and the risk-free interest rate are given as follows: Year = 2010 2011...

Q: Incremental Analysis A1 A2 -$1,000 -$5,000 1 $2,000 $7,000 IRR 100% 40% PW(10%) $818 $1,364 R-122 (R...

A: Since you have posted a multiple question therefore, we will be solving the first question only. How...

Q: What is the price of a bond that has a time to maturity of 4 years, a coupon rate of 3.3%, and a fac...

A: Cash Flow at the time of maturity = $1000 Interest (Annuity) annually = ($1000 * 3.3%) = $33 ...

Q: Bulldogs Inc. has forecasted that its net income will be P520,000. The company has an debt-to- equit...

A: The equity funding required for the project is calculated as the ratio of equity in the capital stru...

Q: Who are the players in the foreign exchange market?

A: Foreign exchange market also known as forex is the market where all the foreign currencies of differ...

Q: Allen Inc. took out a 1-year, 8%, $100,000 loan on March 31, 2018. Interest is due upon maturity of ...

A: Solution:- When an amount is borrowed, the lender charges interest on it and at the maturity, princi...

Q: You want to be able to withdraw $35,000 from your account each year for 20 years after you retire. Y...

Q: You are considering two ways of financing a spring break vacation. You could put it on your credit c...

A: Given: Particulars Rate Credit card rate 14.000% Interest rate 10.00%

Q: The Quick-time Company stock is currently selling for $32. There is a put option on the stock rith a...

A: Stock Price 32.00 Strike Price 29.00 Variance 0.0625 Risk Free Rate 0.02 Time Period 6 Month...

Q: .Use the exact interest method (365 days) and the ordinary interest method (360 days) to compare the...

A: Exact Interest: Exact interest computes the interest that is based on a year having 365 days. Ordi...

Q: Determine the principal remaining after 36 monthly payments have been made for a 5-year loan of P40,...

A: Loan (L) = P 40000 n = 5 years = 60 months Interest rate = 8% quarterly compounded Let r = Monthly i...

Q: If the effective annual interest rate is 15% then what is the equivalent annual rate compounded quar...

A: Effective annual rate (EAR) = 15% Number of compounding per year (m) = 4

Q: Bulldogs Inc. has forecasted that its net income will be P520,000. The company has an debt-to-equity...

A: Funding amount = P 600000 Debt to equity ratio = 25%

Q: (Related to Checkpoint 4.2) (Capital structure analysis) The liabilities and owners' equity for Camp...

A: Borrowings are the loan which is taken by the individual to meet its financial requirements. The mor...

Q: McCabe Corporation is expected to pay the following dividends over the next four years: $15, $11, $9...

A: Answer - Formula for Share Price P0 = D0 (1+g) / [R-g]= D1 / [R-g]Price at P4 -= D5 / [R-g]= (2.95x1...

Q: Weekly (Feb 21-27) Projected Actual Difference Food Cost $6,971 $7,842 +$871 (over) Beverage Cost $3...

A: Solution:- The financial results are measured by comparing projected profits to the actual profits. ...

Q: Bulldogs Inc. sells on term 3/20, net 40. Total sale for the year are P1,200,000 on which 40% is cas...

A: Total Sales = P1,200,000 Cash Sales = 40%

Q: You are planning to retire in 25 years time. Immediately after your retirement, you wish to go for a...

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only on...

Q: You want to start saving for your first car which costs R300 000. You decide to save by investing in...

A: The investment made monthly grow to much larger amount due to the power of compounding over the peri...

Q: What is the amount of compensating balance would be required for a nominal interest rate of 12% to e...

A: Borrowings are the loan which is taken by the individual to meet its financial requirements. The mor...

Q: ABC Co. paid out one-half of its 1994 earnings by dividends. Its earnings increased by 20% and the a...

A: Hi student Since there are multiple questions, we will answer only first question.

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6 years, and an estimated salvage value of 800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase- The replacement machine would permit an output expansion, so sales would rise by 1,000 per year; even so, the new machines much greater efficiency would cause operating expenses to decline by 1,500 per year The new machine would require that inventories be increased by 2,000, but accounts payable would simultaneously increase by 500. Dautens marginal federal-plus-state tax rate is 25%, and its WACC is 11%. Should it replace the old machine?
Gallant Sports s considering the purchase of a new rock-climbing facility. The company estimates that the construction will require an initial outlay of $350,000. Other cash flows are estimated as follows: Assuming the company limits its analysis to four years due to economic uncertainties, determine the net present value of the rock-climbing facility. Should the company develop the facility if the required rate of return is 6%?
The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000, with annual net cash flows of $9,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether or not you would recommend that Ham and Egg invest in this oven.
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?
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.
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.
Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Washington-Pacific (W-P) invested $4 million to buy a tract of land and plant some young pine trees. The trees can be harvested in 10 years, at which time W-P plans to sell the forest at an expected price of $8 million. What is W-P’s expected rate of return?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
Bouvier Restaurant is considering an investment in a grill that costs $140,000, and will produce annual net cash flows of $21,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether Bouvier should invest in the grill.
Manzer Enterprises is considering two independent investments: A new automated materials handling system that costs 900,000 and will produce net cash inflows of 300,000 at the end of each year for the next four years. A computer-aided manufacturing system that costs 775,000 and will produce labor savings of 400,000 and 500,000 at the end of the first year and second year, respectively. Manzer has a cost of capital of 8 percent. Required: 1. Calculate the IRR for the first investment and determine if it is acceptable or not. 2. Calculate the IRR of the second investment and comment on its acceptability. Use 12 percent as the first guess. 3. What if the cash flows for the first investment are 250,000 instead of 300,000?
Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.