When determining the best time to replace an existing asset, for what reason would you need to use marginal analysis? a. To determine what the most appropriate tax rate for the project should be b. To estimate the cost of capital for the new asset c. To determine if the defender asset should be used beyond its ESL. d. To determine the length of time the challenger asset should be used once it is placed into service.
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When determining the best time to replace an existing asset, for what reason would you need to use marginal analysis?
a. To determine what the most appropriate tax rate for the project should be
b. To estimate the cost of capital for the new asset
c. To determine if the defender asset should be used beyond its ESL.
d. To determine the length of time the challenger asset should be used once it is placed into service.
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- Initial Outlay = Cost of Asset + Installation charges + Opportunity costs of any Existing asset + any working capital required – proceeds from selling an existing asset Tax Effects The above formula was given by our tutor to calculate this. How would you treat the costs using this formaula?In the summation (cost) method of valuation, which of the following steps is the ONLY one that a valuer would take in estimating value? a. Estimate the net operating income of the property. b. Determine the value of the land using the Assessed Annual Value and tax rate. c. Estimate the accrued depreciation. d. Calculate the acquisition price of the construction material used when the structure was built.Which of the following is an advantage of using the payback period method for project selection? The payback period method considers the time value of money The payback period method considers accounting income The payback period method shows when funds will be available for reinvestment The payback period method ignores the time value of money
- True or False: If a project involves buying an asset, and if the company uses “accelerated depreciation” for tax purposes, after-tax cash flows for the project would be smaller in earlier years of the project than if the company used “straight line depreciation”, and therefore the project’s NPV would be smaller if it used accelerated depreciation, compared to the NPV if it used straight-line depreciation. Explain your answer.Alternative Methods I and II are proposed for a security operation. The following is comparative information: Determine which is the better alternative based on an after-tax annual cost analysis with an effective income tax rate of 40% and an after-tax MARR of 15%, assuming the following methods of depreciation: Solve, a. SL b. MACRS.Why is depreciation expense recognized? Select one: a. To provide a better estimate of the market value of the depreciated assets. b. So that the balance sheet value of plant assets will more accurately reflect the replacement cost of the assets. c. To ensure that cash will be available at the end of the assets' useful life in order to replace it. d. To match the cost of the asset against the revenue using a reasonable allocation. method. Save AnswersNext
- Under IFRS, research must be expensed but some development expenditures may be capitalized. To capitalize development expenditures, firms must demonstrate several factors that include all of the following except: Multiple Choice technical feasibility. length of time the intangible asset is expected to provide benefits. ability to use or sell the asset. how the intangible asset will generate probable future economic benefits.When determining the value for vacant land, we look to the following data points for financial calculations, EXCEPT: (A) Perc Test for Contaminants (B) Soft Costs (C) Profit Rates of Return (D) Hard CostsIn estimating "after-tax incremental operating cash flows" for a project, you should include all of the following except __________. a. changes in working capital resulting from the project, net of spontaneous changes in current liabilities b. changes in costs due to a general appreciation in those costs c. the amount (net of taxes) that we could realize from selling a currently unused building of ours that we intend to use for our project d. costs that have previously been incurred that are unrecoverable
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