A company bought an electric motor two years ago at a cash price of P 275, 000 and will lasts ten more years. It is expected that five years from now, its book value will become P 124, 500 if depreciation uses the Straight Line Formula. Find: a) the scrap value of the motor. b) the book value of the motor three years from now.

Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $197,000. The equipment will have an initial cost of $435,000 and have a 8 year life. If the salvage value of the equipment is estimated to be $79,000, what is the payback period? Multiple Choice 1.80 years 2.21 years 2.96 years 8.00 years

York Steel buys a new press brake for $800,000. It is expected to last twenty years and have a salvage value of $100,000. Using the declining balance method, what rate of depreciation will produce a book value after 20 years that will equal the salvage value?

Palmer Corporation is considering the purchase of a new plece of equipment. The cost savings from the equipment would result in an annual increase in net income of $152,000. The equipment will have an initial cost of $494,000 and a 8 year useful life. If the salvage value of the equipment is estimated to be $78,000, what is the payback period? Multiple Choice 2.42 years 3.25 years 8.00 years 4.00 years

George Company has the opportunity to purchase an asset that costs $40,000. The asset is expected to increase net income by $10,000 per year. Depreciation expense will be $5,000 per year. Based on this information the payback period is:                           A) 4 years.                           B) 2.5 years.                           C) 2.67 years.                           D) 8 years.

A piece of equipment has a first cost of $75000, a maximum useful life of 4 years, and a market (salvage) value described by the relation Sk = 60000 – 10500k, where k is the number of years since it was purchased. The AOC series is estimated using AOC = 30000 + 4500k. The interest rate is 9% per year. When should the company replace this asset?

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a. A new operating system for an existing machine is expected to cost $837,000 and have a useful life of six years. The system yields an incremental after-tax income of $245,000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $105,000. b. A machine costs $570,000, has a $58,000 salvage value, is expected to last eight years, and will generate an after-tax income of $155,000 per year after straight-line depreciation. Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Complete this question by entering your answers in the tabs below. Required A Required B A new operating system for an existing machine is expected to cost $837,000 and have a useful life of six years. The system yields an incremental after-tax income of $245,000 each year after deducting its…

2. A firm purchased a machine with a life of four years. Depreciating the machine using straight-line depreciation over the four years yields an NPV = -$10. The initial investment was $1000, cost of capital = 15%, and tax rate = 34%. If the firm is allowed to depreciate the machine under the MACRS 3-year class, what will be the new net present value? (Use MACRS table). Assume losses, if any, will save taxes on other operations of the company.

A computer system can be purchased for $18,000. The operating costs will be $10,000 per year, and the useful life is expected to be 5 years with a $5,000 salvage value at that time. The present annual sales volume should increase by $16,000 as a result of acquiring the system. Assume the company's tax rate is 50%. Using a straight-line deprecation method, compute annual taxes and IRR for the investment. Rework the previous problem assuming (i) the system's taxable life is 8 years with a salvage value of $2,000, but that (ii) the company still salvages the system after 5 years for $5,000. Describe how this may affect cash flow in the forthcoming years.