EBK CONTEMPORARY ENGINEERING ECONOMICS
6th Edition
ISBN: 8220101336736
Author: Park
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 3ST
a.
To determine
The project cash flow in the absence of inflation.
b.
To determine
The
c.
To determine
Acceptability of the project.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
You are evaluating a project that will require an investment of $15 million that will be depreciated over a period of 19 years. You are concerned that the corporate tax rate will increase during the life of the project. Would this increase the accounting break-even point? Would it increase the NPV break-even point?
Barbara Thompson is considering the purchase of a piece of business rental property containing stores and offices at a cost of $350,000. Barbara estimates that annual receipts from rentals will be $55,000 and that annual disbursements. other than income taxes, will be about $18,000. The property is expected to appreciate at the annual rate of 5%. Barbara expects to retain the property for 20 years once it is acquired. Then it will be depreciated on the basis of the 39-year real-property class (MACRS), assuming that the property would be placed in service on January 1. Barbara's marginal tax rate is 30%, and her MARR is 10%. What would be the minimum annual total of rental receipts that would make the investment break even?
Sam and Bridget are self-employed. Each year, they contribute money to Self- Managed Superannuation Fund (SMSF), the SB Superannuation fund, which was set up by their accountant.
This year, they have been expanding their business and do not have enough cash to contribute to the super fund. They own the premises on which the business is conducted outright (ie, there is no mortgage). Bridget owns 8,000 Commonwealth Bank shares. They also own a residential investment property.
Required:
Can you advise any alternative methods by which Sam and Bridget can contribute to the SB SMSF in the event they do not have the cash flow to contribute? Which assets could they transfer to the SB SMSF, and which are precluded? Explain.
Chapter 11 Solutions
EBK CONTEMPORARY ENGINEERING ECONOMICS
Ch. 11 - Prob. 1PCh. 11 - Prob. 2PCh. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - An annuity provides for 10 consecutive end-of-year...Ch. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
Ch. 11 - Prob. 11PCh. 11 - Prob. 12PCh. 11 - Prob. 13PCh. 11 - Prob. 14PCh. 11 - Prob. 15PCh. 11 - Prob. 16PCh. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prob. 19PCh. 11 - Prob. 20PCh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Prob. 23PCh. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26PCh. 11 - Prob. 27PCh. 11 - Prob. 28PCh. 11 - Prob. 29PCh. 11 - Prob. 30PCh. 11 - Prob. 31PCh. 11 - Prob. 1STCh. 11 - Prob. 2STCh. 11 - Prob. 3ST
Knowledge Booster
Similar questions
- We-Got-It Office Supply has a beginning inventory of 12 paper cutters at a cost of $37 each. During the year, the company purchased 20 cutters at $38 and 25 at $40. Determine the ending inventory using the specific identification method. The ending inventory of 8 cutters consisted of 2 from beginning inventory, 1 from the first purchase, and 5 from the last purchase.arrow_forwardMarket Top Investors, Incorporated, is considering the purchase of a $345, 000 computer with an economic life of five years. The computer will be fully depreciated over five years using the straight - line method, at which time it will be worth $78, 000. The computer will replace two office employees whose combined annual salaries are $89, 000. The machine will also immediately lower the firm's required net working capital by $78, 000. This amount of net working capital will need to be replaced once the machine is sold. The corporate tax rate is 23 percent. The appropriate discount rate is 11 percent. Calculate the NPV of this projectarrow_forwardAn investor company purchased 65,000 of the 200,000 outstanding shares of the investee company's common stock for $347,000 on January 1, 2021. During 2021, the investee company declared dividends of $31,000 and reported earnings for the year of $249,000. If the investor company uses the equity method of accounting for its investment in the investee company, it should report Investment Income from the investee company for 2021 in the amount of $__________. (Do not round your answer for any part of the computation.)arrow_forward
- The imputed market value technique, which is sometimes called the implied market value, can be used for this purpose an well as for comparison with markatplace vaus when current data are available. True Falsearrow_forwardEquipment bought for Php. 60,000 is expected to last for 30 years. If the book value after 20 years is Php. 20,000. How much is the depreciation each year, and the book value after 10 years.arrow_forwardWhen determining the present worth of the after-tax cash flows of an investment purchased using borrowed funds, which of the following are required? I. Principal and interest component for each loan payment II. Tax rate applied to the taxable income generated by the investment III. Depreciation deductions for the investment IV. Before-tax and loan cash flows for the investment V. MARR. a. I, III, IV, and V only b. II, III, IV, and V only c. IV and V only d. All items (I, II, III, IV, and V).arrow_forward
- Mammed purchased a building on 1 July 2012 for 500,000 AZN. At the date of acquisition, the useful life of the building was estimated to be 20 years and depreciation is calculated using the straight - line method. At 1 September 2015, an independent valuer valued the building at 350,000 AZN and the revaluation was recognised in the financial statements. Mammeds accounting policies state that excess depreciation arising on revaluation of non - current assets can be transferred from the revaluation surplus to retained earnings. Financial year end is 31 December. Based on information provided calculate/provide: 1. Revaluation surplus arised on 1 September 2015 2. Depreciation charge for the year ended 31 December 2015 3. Calculate exceed depreciation for the year ended 2015arrow_forwardYour company is contemplating the purchase of a large stamping machine. The machine will cost $180,000. With additional transportation and installation costs of $5,000 and $10,000, respectively, the cost basis for depreciation purposes is $195,000. Its MV at the end of five years is estimated as $40,000. The IRS has assured you that this machine will fall under a three-year MACRS class life category. The justifications for this machine include $40,000 savings per year in labor and $30,000 savings per year in reduced materials. The before-tax MARR is 20% per year, and the effective income tax rate is 40%. Use this information to solve, The taxable income for year three is most nearly (a) $5,010 (b) $16,450 (c) $28,880 (d) $41,120 (e) $70,000.arrow_forwardThe Accuweather Corporation manufactures barometers and thermometers for weather forecasters. In an attempt to forecast its future needs for mercury, Accuweather's chief economist estimated average monthly mercury needs as: N = 500 + 10X where N = monthly mercury needs (units) and X = time period in months (January 2008= 0). The following monthly seasonal adjustment factors have been estimated using data from the past five years: Month Adjustment Factor January 15% April 10% July -20% September 5% December -10% (a) Forecast Accuweather's mercury needs for January, April, July, September, and December of 2010. (b) The following actual and forecast values of mercury needs in the month of November have been recorded: Year Actual Forecast 2008 456 480 2009 324 360 2007 240 240 Q 4. (B) Emco Company…arrow_forward
- A highly liquid asset *a. can be converted into a means of payment easily without loss of value.b. is highly leveraged.c. has high transaction costs associated with its sale.d. generally has a very limited market for its resale.arrow_forwardThere are many tax rules and regulations you should be aware of when investing-whether it be in stocks; bonds; mutual funds; real estate; or collectibles such as artwork, antiques, gems, memorabilia, stamps, and coins. Capital gains are proceeds derived from these types of investments. Unless they are specified as being tax-free, such as municipal bonds, you must pay capital gains taxes on these proceeds. Capital gains are taxed in one of two ways. If the investment is held for one year or less, this is considered short-term and is taxed as ordinary income at your regular income tax rate. As this is written, if the investment is held for more than one year, it is considered long-term and qualifies for various tax discounts, as follows for single taxpayers with earnings as shown below. Stocks Held Capital Gains Rates Up to $38,700 $38,700–$426,700 Over $426,700 Over 1 year(long-term) 0% 15% 20% (a) If you are in the 25% tax bracket for ordinary income and have a 15% capital…arrow_forwardEFG Corporation ("EFG") is a Canadian-controlled private corporation and has correctly calculated its net income for tax purposes to be $857,000 for the year ending December 31, 2019, as shown below: Business income $710,000 Taxable capital gains $80,000 Taxable dividends from Canadian public corporations $32,000 Taxable dividends from XYZ Inc. $5,000 Interest on five-year bonds $30,000 Net income for tax purposes $857,000 EFG owns 100% of the shares of XYZ. For the current year, XYZ claimed the small-business deduction on $80,000 of its active business income. Additional information: • EFG made charitable donations of $45,000 during the year • Net capital losses were $35,000 as of January 1, 2019 • Non-capital losses were $50,000 as of January 1, 2019 • At the end of the previous year, EFG had a balance in its non-eligible refundable dividend tax on hand (RDTOH) account of $18,000 and GRIP of $2,000. XYZ received a dividend refund of $1,917 from its non-eligible RDTOH when it paid…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education