Major medical complexes and their service providers continue to move toward advanced health informatics– acquiring, managing, and using information to provide better healthcare. A new analyzer for researchingand evaluating patient samples, and making informed recommendations in the treatment of complex bloodcancers, is purchased for $270,000. It is estimated to have a useful life of 6 years and to be sold at the end ofthat time for $9,000.Develop a table showing the depreciation and book value for each year using both the Excel® DDBworksheet function and the Excel® SLN worksheet function such that the depreciation switches fromdouble declining balance to straight-line at the optimum time.Year12345$LALA$DepreciationLAtALA$Book Value

Depreciation refers to the gradual allocation of the cost of a tangible asset (such as machinery,…

Answered: Year 1 $ 2 3 4 tA 5 $ LA $ LA $ tA $…

Business

Accounting

Year 1 $ 2 3 4 tA 5 $ LA $ LA $ tA $ Depreciation $ $ LA $ $ tA $ Book Value

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter26: Capital Budgeting (capbud)

Section: Chapter Questions

Problem 5R

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Major medical complexes and their service providers continue to move toward advanced health informatics - acquiring, managing, and using information to provide better healthcare. A new analyzer for researching and evaluating patient samples, and making informed recommendations in the treatment of complex blood cancers, is purchased for $270,000. It is estimated to have a useful life of 6 years and to be sold at the end of that time for $10,000. Part a — Develop a table showing the depreciation and book value for each year using both the Excel® DDB worksheet function and the Excel® SLN worksheet function such that the depreciation switches from double declining balance to straight-line at the optimum time. Year 1 2 3 4 5 Your answer is partially correct. 6 $ $ LA $ $ ta $ tA $ Depreciation 43333 $ 43333 43334 $ $ 43334 ta 43333 $ 43333 $ $ Book Value 226667 183334 140000 96667 53334 10000 Carry all interim calculations to 5 decimal places and then round your final answers to 2 decimal…
The Parkview Hospital is considering the purchase of a new autoclave. This equipment will cost $150,000. This asset will be depreciated using an MACRS (GDS) recovery period of three years. Use this information to solve, The BV at the end of the second year is (a) $27,771 (b) $41,667 (c) $116,675 (d) $33,325
Friendly Tests Inc. is a commercial testing lab, performing a variety of lab tests for hospitals in the area. The management is considering an addition of a new type of test. There is plenty of room in its existing lab facility, but the new test would require an acquisition of new test equipment. The purchase price of the equipment is $215,000. It will be depreciated using MACRS 7-year recovery period (use the rates listed in Table 16-2 in the textbook). The management expects the demand for the new test type to only last 6 years, and therefore the project is expected to end in 6 years, and the equipment to be sold for $60,000 at the end of year 6. The company will also need to hire a part-time lab technician, for $30, 000 in the first year of the project, with an annual pay increase of 5% each year after. Equipment maintenance and operating cost is expected to be $4, 000 per year. It is also expected additional supplies will be needed, costing $10,000 per year. The additional revenues…
Friendly Tests Inc. is a commercial testing lab, performing a variety of lab tests for hospitals in the area. The management is considering an addition of a new type of test. There is plenty of room in its existing lab facility, but the new test would require an acquisition of new test equipment. The purchase price of the equipment is $215,000. It will be depreciated using MACRS 7-year recovery period (use the rates listed in Table 16-2 in the textbook). The management expects the demand for the new test type to only last 6 years, and therefore the project is expected to end in 6 years, and the equipment to be sold for$60,000 at the end of year 6. The company will also need to hire a part-time lab technician, for $30,000 in the first year of the project, with an annual pay increase of 5% each year after. Equipment maintenance and operating costs are expected to be $4,000 per year. It is also expected additional supplies will be needed, costing $10,000 per year. The additional revenues…
Friendly Tests Inc. is a commercial testing lab, performing a variety of lab tests for hospitals in the area. The management is considering an addition of a new type of test. There is plenty of room in its existing lab facility, but the new test would require an acquisition of new test equipment. The purchase price of the equipment is $215,000. It will be depreciated using MACRS 7-year recovery period (use the rates listed in Table 16-2 in the textbook). The management expects the demand for the new test type to only last 6 years, and therefore the project is expected to end in 6 years, and the equipment to be sold for$60,000 at the end of year 6. The company will also need to hire a part-time lab technician, for $30,000 in the first year of the project, with an annual pay increase of 5% each year after. Equipment maintenance and operating costs are expected to be $4,000 per year. It is also expected additional supplies will be needed, costing $10,000 per year. The additional revenues…
You have been asked to evaluate the proposed acquisition of a new portable MRI. The system’s price is $70,000 and it will cost another $10,000 for transportation and installation the system is expected to be sold after three years because a new stationary machine will be acquired at that time the best estimate of the system salvage value after three years is $25,000 the system will have no impact on volume or reimbursement (and hence revenues) but it is expected to save $20,000 per year in operating costs the not for profit business corporate cost of capital is 10% and the standard risk adjustment is 4% points What is the project's net investment outlay at time 0? What are the projects operating cash flows in years 1, 2, and 3? What is the terminal cash flow at the end of year 3? If the project has average risk, it is expected to be profitable?
You have been asked to evaluate the proposed acquisition of a new portable MRI. The system’s price is $70,000 and it will cost another $10,000 for transportation and installation the system is expected to be sold after three years because a new stationary machine will be acquired at that time the best estimate of the system salvage value after three years is $25,000 the system will have no impact on volume or reimbursement (and hence revenues) but it is expected to save $20,000 per year in operating costs the not for profit business corporate cost of capital is 10% and the standard risk adjustment is 4% points If the project has average risk, it is expected to be profitable?
Cetec Aviation Services has cost estimates associated with operating and maintaining the currently owned filter analysis system as shown below. It isconsidering the acquisition of a replacement system that can identify residual particles in industrial filters, report its findings, and archive images and information for future retrieval. Determine the cost of keeping the current system one more year at an interest rate of 10% per year.
A local hospital has the following replacement decision problem:Old machine: The hospital purchased a digital image-processing machinethree years ago at a cost of $50,000. The machine had an expected life ofeight years at the time of purchase and an expected salvage value of $8,000at the end of the eight years. However, the old machine has been slow athandling the increased business volume, so management is consideringreplacing it. The old machine can be sold today for $12,000. New machine: A new machine can be purchased for $80,000, includinginstallation costs. Over its five-year life, the new machine will reduce cashoperating expenses by $30,000 per year. Sales are not expected to change.At the end of its useful life, the new machine is estimated to be worthless.The hospital's interest rate for project justification is known to be 12%. The hospital does not expect a better machine (other than the current challenger) to be available for the next five years. Assume that the economic…
1. You have been asked to evaluate the proposed acquisition of a new portable MRI. The system’s price is $70,000 and it will cost another $10,000 for transportation and installation the system is expected to be sold after three years because a new stationary machine will be acquired at that time the best estimate of the system salvage value after three years is $25,000 the system will have no impact on volume or reimbursement (and hence revenues) but it is expected to save $20,000 per year in operating costs the not for profit business corporate cost of capital is 10% and the standard risk adjustment is 4% points a. What is the project's net investment outlay at time 0? b. What are the projects operating cash flows in years 1, 2, and 3? c. What is the terminal cash flow at the end of year 3? d. If the project has average risk, it is expected to be profitable?
A Corporation manages the back office functions of private medical practices. The company is analyzing a project to digitize the collection of medical records. Last year, the company spent $400,000 during a pilot project to prove that the digitization project was a viable idea, and now the company is evaluating whether to invest in it. Acquiring the necessary computer hardware and software to implement the project will cost $10,000,000. In addition, successful implementation will require the corporation to spend $1,300,000 to install and customize the software, plus $700,000 to purchase hand-held digital devices that medical staff will use to record medical data. Corporation will depreciate the system over 4 years to a net book value of zero. The corp expects an immediate increase in its Accounts Receivable balance of $200,000 as a result of the project. Because the purchases of paper forms and files will decline, the company also expects an immediate decrease in Accounts Payable of…
A land grant university has upgraded its Course Management System (CMS), integrating the system throughout all of its main campus and branch campuses around the state. It has purchased a set of 15 servers and peripherals for needs associated with the CMS. The total cost basis is $120,000 and expected use will be 5 years, after which it will have no projected value. Calculate the depreciation deduction and book value for each year. Use straight-line depreciation. Use double declining balance depreciation.