2. cesa. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Round your present valuefactor to 3 decimals and round all other intermediate calculations to nearest whole dollar.)Net present valuec. The internal rate of return is between what two whole discount rates (e.g., between 10% and 11%, between 11% and 12 %, between 12%and 13%, between 13% and 14%, etc.)?The internal rate of return is betweenandMinimum salvage value required to generate a positive present value%d. Reset the discount rate to 12%. Suppose the salvage value is uncertain. How large would the salvage value have to be to result in apositive net present value? es2. The company is considering a project involving the purchase of new equipment. Change the data area of your worksheet to matchthe following: Use Exhibit 78-1 and Exhibit 78-2. (Use appropriate factor(s) from the tables provided.)A1 Chapter 7: Applying Excel234DataExample ECost of equipment neededWorking capital neededOverhaul of equipment in four years8 Salvage value of the equipment in five years.9Annual revenues and costs:567Sales revenuesCost of goods soldOut-of-pocket operating costs10111213 Discount rate$$$$$$$B210,00025,00015,00035,000360,000225,00080,000C12 %a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Round your present valuefactor to 3 decimals and round all other intermediate calculations to nearest whole dollar)

We are going to build an excel sheet to determine the cash flow for each year. Then we are going to…

Net present value c. The internal rate of return is between what two whole discount rates (e.g., between 10 % and 11%, between 11% and 125 and 13%, between 13% and 14%, etc.)? The internal rate of return is between and %

Net present value c. The internal rate of return is between what two whole discount rates (e.g., between 10 % and 11%, between 11% and 125 and 13%, between 13% and 14%, etc.)? The internal rate of return is between and %

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 4PROB

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Referring 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?
A truck was recently purchased for 75,000 with a salvage value of 5,000 and an estimated useful life of eight years or 150,000 miles (24,000 miles per year for the first five years and 10,000 miles per year after that). Enter the new information in the Data Section of the worksheet. Again, make sure the totals for all three methods are in agreement. Print the worksheet. Save this new data as DEPREC5.
To test your formulas, assume the machine purchased had an estimated useful life of three years (20,000, 30,000, and 50,000 hours, respectively). Enter the new information in the Data Section of the worksheet. Does your depreciation total 320,000 under all three methods? There are three common errors made by students completing this worksheet. Lets clear up two of them. One, an asset that has a three-year life should have no depreciation claimed in Year 4. This can be corrected using an =IF statement in Year 4. For example, the correct formula in cell C32 is =IF(B32D9,0,(D7D8)/D9) or =IF(B32D9, 0, SLN(D7, D8, D9)). You may wish to edit what you have already entered rather than retype it. Two, as mentioned in requirement 2, the double-declining-balance calculation needs to be modified in the last year of the assets life. Assuming you have already modified the formula for Year 4 (per instructions in step 2), alter the formula for Year 3 also. If you corrected any formulas, test their correctness by trying different estimated useful lives (between 3 and 8) in cell E9. Then reset the Data Section to the original values, save the revised file as DEPREC2, and reprint the worksheet to show the correct formulas. The third common error doesnt need to be corrected in this problem. The general form of the double-declining-balance formula needs to be modified to check the net book value of the asset each year to make sure it does not go below salvage value. =DDB does this automatically, but if you are writing your own formulas, this gets very complicated and is beyond the scope of the problem.
Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an estimated useful life of four years or 100,000 hours, and a salvage value of 30,000. This machine will be used 30,000 hours during Year 1, 20,000 hours in Year 2, 40,000 hours in Year 3, and 10,000 hours in Year 4. Dunedin buys equipment frequently and wants to print a depreciation schedule for each assets life. Review the worksheet called DEPREC that follows these requirements. Since some assets acquired are depreciated by straight-line, others by units of production, and others by double-declining balance, DEPREC shows all three methods. You are to use this worksheet to prepare depreciation schedules for the new machine.
Montezuma Inc. purchases a delivery truck for $20,000. The truck has a salvage value of $8,000 and is expected to be driven for ten years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After five years of recording depreciation, Montezuma determines that the delivery truck will be useful for another five years (ten years in total, as originally expected) and that the salvage value will increase to $10,000. Determine the depreciation expense for the final five years of the assets life, and create the journal entry for years 6â€“10 (the entry will be the same for each of the five years).
Use the information in Problem A-1 to solve this problem. Assume that the van is five-year property for tax purposes. Required Prepare a schedule of depreciation under MACRS. Round figures to the nearest whole dollar. PROBLEM A-1 A delivery van was bought for 18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be 2,000. Check Figure Year 3 depreciation, 3,456
Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for 120,000 miles. Montello uses the units-of-production depreciation method and in year one it expects to use the truck for 23,000 miles. Calculate the annual depreciation expense.
IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE CALCULATION OF DEPRECIATION On January 1, 20-1, two flight simulators were purchased by a space camp for 77,000 each with a salvage value of 5,000 each and estimated useful lives of eight years. On January 1, 20-2, the hydraulic system for Simulator A was replaced for 6,000 cash and an updated computer for more advanced students was installed in Simulator B for 9,000 cash. The hydraulic system is expected to extend the life of Simulator A three years beyond the original estimate. REQUIRED 1. Using the straight-line method, prepare general journal entries for depreciation on December 31, 20-1, for Simulators A and B. 2. Enter the transactions for January 20-2 in a general journal. 3. Assuming no other additions, improvements, or replacements, calculate the depreciation expense for each simulator for 20-2 through 20-8.
Please answer both questions: 1. Equipment for immersion cooling of electronic components has an installed value of $175,000 with an estimated trade-in value of $35,000 after 15 years. A capital recovery utilizing the Matheson Formula was used. How much was the total capital recovered from on year 10 and how much is the book value of the components? 2. Youngblood Shipbuilding Yard just purchased $750,000 in capital equipment for ship repairing functions on dry-docked ships. Estimated salvage is $120,000 after 15 years of use. Calculate the annual depreciation charge and the total deprecation charge as well as the book value for the 10th year if Sum-of-the-Years Digit was used in recovering the capital spent.
If B = $400,000, n = 6 years, and S is estimated at 15% of B for a new pavement recycling machine, use the SYD method to determine (a) the book value after 3 years, and (b) the rate of depreciation and the depreciation amount in year 4.
Use the following information for the Exercises below. (Algo) Skip to question [The following information applies to the questions displayed below.] Tory Enterprises pays $242,400 for equipment that will last five years and have a $44,000 salvage value. By using the equipment in its operations for five years, the company expects to earn $88,900 annually, after deducting all expenses except depreciation. Exercise 10-9 (Algo) Straight-line depreciation and income effects LO P1 Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming straight-line depreciation is used. Income before Depreciaton Depreciation Net( pretax) Income Year 1 year 2 year 3 year 4 year 5 Totals
An equipment has a first cost of P500,000 and the cost of installation is P30,000. If the salvage value is 10% equipment cost at the end of the its useful life of 5 years. Compute the book value at the end of 3rd year. Using: 1. Straight Line Method 2. Sum of Years Digit Method 3. Sinking Fund Method (if money is worth 6% per annum) 4. Declining Balance Method 5. Using Double Declining Balance Method