Assume the purchase price of a combine is $250,000. It is estimated to have a salvage value of $68,000 and a useful life of 8 years. The cost of capital is 7 percent. Compute the average annual depreciation and interest costs.
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Assume the purchase price of a combine is $250,000. It is estimated to have a salvage value of $68,000 and a useful life of 8 years. The cost of capital is 7 percent. Compute the average annual
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- Consider a project to supply Detroit with 27,000 tons of machine screws annually for automobile production. You will need an initial $4,600,000 investment in threading equipment to get the project started; the project will last for 5 years. The accounting department estimates that annual fixed costs will be $1,100,000 and that variable costs should be $205 per ton; accounting will depreciate the initial fixed asset investment straight-line to zero over the 5-year project life. It also estimates a salvage value of $475,000 after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $308 per ton. The engineering department estimates you will need an initial net working capital investment of $440,000. You require a return of 12 percent and face a tax rate of 23 percent on this project. a. Suppose you’re confident about your own projections, but you’re a little unsure about Detroit’s actual machine screw…A reactor of special design un the major item of equipment in a small chemical plant The initial cost of a Completely installed reactor is $ 60000 to the salvage value of the end of the useful life is estimated to be $ 10000. The total annual expenses for the plant are $100000. Excluding depreciation costs for the reactor. How many years of useful life should de estimated for the reactor if 12% of the total annual expenses for the Plant are due to the cost for reactor depreciation?A tractor costs $24,680, has an expected life of 12 years, and has a salvage value of $2,600. Use straight-line depreciation to find the yearly depreciation. Make a depreciation schedule for the first three years' depreciation. Complete the table. Year Depreciation 1 $ 2 3 $ $ Accumulated depreciation $ $ $ End-of-year book value $ $
- You are evaluating two different silicon wafer milling machines. The Techron | costs $264,000, has a 3-year life, and has pretax operating costs of $71,000 per year. The Techron Il costs $460,000, has a 5-year life, and has pretax operating costs of $44,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $48,000. If your tax rate is 22 percent and your discount rate is 12 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) > Answer is complete but not entirely correct. Techron I $ -134,840.83 Techron II $ -107,570.18Machine that cost $150,000 and on which $120,000 of accumulated depreciation has beenrecorded was disposed of for $30,000 cash. Calculate the gain or loss.You are evaluating two different silicon wafer milling machines. The Techron I costs $270,000, has a 3-year life, and has pretax operating costs of $73,000 per year. The Techron II costs $470,000, has a 5-year life, and has pretax operating costs of $46,000 per year. For both milling machines, use straight-line depreciation to zero over the project's life and assume a salvage value of $50,000. If your tax rate is 24 percent and your discount rate is 10 percent, compute the EAC for both machines. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Techron I Techron II
- An asset costs $14300. What declining-balance depreciation rate would result in the scrap value of $5820 after 4 years? (Units of % required for response)5 A chemical plant is considering installing a new water purification system that costs $X. The expected life is A years and the salvage value is computed using the declining-balance method with a depreciation rate of B%. The operating costs are estimated at $Y per hour of operation. The expected savings are $Z per operating hour. MARR = X= Y= Z= A= B= C= 10% $15,300 $5 per hour $15 per hour 5 years 10% 1500 hours What is the salvage value at the end of A years? Try Again What is the annual worth of the new system if the current operating hours are C per year on average? Try Again What is the break-even level of operating hours? Try AgainYou are offered a device that uses machine learning to improve performance. You expect it to produce monthly cash flows for you as follows: $ 10K, $40K, $70K, $100K. After 4 months, it will be obsolete and useless ( but good news...no disposal cost). Your discount rate is 12% nominal annual. Neglecting tax and depreciation, what would you pay for this device, in $K? (No dollar sign or comma, so $15,500 would be 15.5; $100,000 would be 100.)
- Straight Line Depreciation Example: If an asset costs $20,000, has an estimated salvage value of $5,000 and a useful life of 5 years, the annual straight-line depreciation charge is calculated as:eBook Net Present Value Method—Annuity Take a Load Off Hotels is considering the construction of a new hotel for $12,000,000. The expected life of the hotel is 6 years with no residual value. The hotel is expected to earn revenues of $12,400,000 per year. Total expenses, including straight-line depreciation, are expected to be $10,000,000 per year. Take a Load Off's management has set a minimum acceptable rate of return of 12%. a. Determine the equal annual net cash flows from operating the hotel.$fill in the blank 1 b. Calculate the net present value of the new hotel, using the present value factor of an annuity of $1 table below. If required, round to the nearest dollar. If the net present value is negative, enter the amount using a minus sign. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791…Most businesses replace their computers every two to three years. Assume that a computer costs $2,000 and that it fully depreciates in 3 years, at which point it has no resale value and is thrown away. Suppose the computer did not fully depreciate but still had a $250 value at the time it was replaced. What is the minimum annual cash flow that a computer must generate to be worth the purchase? The minimum annual cash flow must be at least $