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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:A building has a salvage value of P1,000,000O at the end of its useful life of 50
years. The straight line depreciation is P2,000,000 each year. Find the first cost
of the building
P102 million
P110 million
P101 million
O P100 million
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- onsider the following financial informationabout a retooling project at a computer manufacturing company:• The project costs $2.5 million and has a five-yearservice life.• The retooling project can be classified as sevenyear property under the MACRS rule.• At the end of the fifth year, any assets held for theproject will be sold. The expected salvage valuewill be about 10% of the initial project cost.• The firm will finance 40% of the project moneyfrom an outside financial institution at an interestrate of 10%. The firm is required to repay the loanwith five equal annual payments.• The firm’s incremental (marginal) tax rate on theinvestment is 35%.• The firm’s MARR is 18%.With the preceding financial information,(a) Determine the after-tax cash flows.(b) Compute the annual equivalent worth for thisproject.arrow_forward2) The initial cost of a new m/c is $10,000. The annual operating cost is $1,000/yr for first 3 years, and then becomes $3,000/yr after that. The m/c needs a major repair at the end of 5th year, which costs $5,000. The m/c has 10 years useful life with salvage value of $4,000. Calculate EUAC for keeping the m/c for 10 years. (i=10%/yr)arrow_forwardA machine was purchased for 100,000 and has a salvage value of 20,000 what is the total depreciation on the 7th year if the economic life is 10 years? Assume i = 8% Use sinking fund methodarrow_forward
- I need the answer quicklyarrow_forwardAn oven at a bakery is being considered for replacement. Its salvage value and maintenance costs for several years are given in the table below. The first cost of a new oven is $80,000, including installation, with a MARR of 10%. What is the economic service life for this oven? Year Salvage value at end of year Maintenance costs 0 $20,000 $ 1 75,000 500 2 70,000 500 3 66,000 1000 4 62,000 3000arrow_forwardAn asset cost $200,000. It has a salvage value of $40,000. It has a 10 year life. What is its depreciation expense if the company uses straight-line depreciation? Group of answer choices $200,000 $160,000 $20,000 $16,000arrow_forward
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