A new absorption chiller system costs $360,000 and will save $52,500 in each of the next 12 years. The asset is classified as a seven-year MACRS property for depreciation purpose. The expected salvage value is $20,000. The firm pays taxes at a combined rate of 40% and has an MARR of 12%. What is the net present worth of the system?(a) $46,725(b) $63,739(c) $62,112(d) $53,317

Q: The Scampi Supplies Company recently purchased a new delivery truck. The new truck has an after-tax…

A: Given: Variables in the question:YearAnnual After Tax Cash Flow ($)After Tax Abandonment Value…

Q: A machine has an initial cost of $30,000, labor annual cost of $37,000, maintenance annual cost of…

A:

Q: A company planned to invest $150,000 to add some equipments in it’s production line. This new…

A: Under MACRS, assets are assigned to a specific asset class with a designated recovery period,…

Q: Krostel Company is planning to acquire a machine costing P 500,000 with a useful life of 3 years…

A: Accounting rate of return = Average Annual Income/ Average Investment Accounting rate of return = P…

Q: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,…

A: Net present value and Internal rate of return are the modern methods of capital budgeting that are…

Q: costs $50000, including $5000 for installation. The machine is expected to have a useful life of…

A: Depreciation - Depreciation is an accounting technique for spreading out the expense of a tangible…

Q: Hayden Company is considering the acquisition of a machine that costs $320,000. The machine is…

A: Formulas: Cash payback period = Cash out flows / Cash inflows

Q: Covington Corporation purchased a vibratory finishing machine for $24,000 in year 0. The useful life…

A: The discounted payback period is a variation of the traditional payback period that takes into…

Q: Patterson Corporation is considering the purchase of a new piece of equipment, which would have an…

A: Payback period is concept of capital budgeting. Payback period is the period in which initial…

Q: Finch Manufacturing Company has an opportunity to purchase some technologically advanced equipment…

A: IRR stands for internal rate of return. It is an important capital budgeting tool. IRR is the rate…

Q: A project under consideration by PHI Inc. is summarized. The company uses straight-line…

A: Cashflows are as follows  At time 0   cash outflow = -$75000 From time 1 to 10,  net after tax cash…

Q: erez Manufacturing Company has an opportunity to purchase some technologically advanced equipment…

A: IRR stands for internal rate of return. It is an important capital budgeting tool. IRR is the rate…

Q: EFG Company has an opportunity to invest in a new project. The project requires a $240,000…

A: The net present value method is an important tool for the evaluation of the projects. It refers to…

Q: Franklin Manufacturing Company has an opportunity to purchase some technologically advanced…

A: IRR is also known as Internal rate of Return. It is a capital budgeting technique which helps in…

Q: Gillespie Gold Products, Inc., is considering the purchase of new smelting equipment. The new…

A: ATCF is after tax cash flow is the measurement o0f the performance of the company, that shows the…

Q: A firm plans to build a plant on land it owns. The firm paid $200,000 for the land 30 years ago. Its…

A: Variables in the question:Initial outlay = $20,000,000Sales per year for years 1-10= $12,000,000 No…

Q: Compute the payback period for each of these two separate investments: a. A new operating system for…

A: Answer -   Part 1 - Payback Period = Cost of Investment / Annual Net Cashflow   Where,…

Q: Hayden Company is considering the acquisition of a machine that costs $444,000. The machine is…

A: Payback period: Payback period is the length of time in which an investment reaches its break-even…

Q: An asset in the five-year MACRS property class cost $100,000 and has a zero estimated salvage value…

A: Present worth is the worth in current time of the amount which is expected to be received in some…

Q: Scholastic Co. is evaluating a machine with an initial cost of $450,000 and a five-year life that…

A: Net Present Value is that amount which is calculated with the help of future cash inflow and…

Q: Hayden Company is considering the acquisition of a machine that costs $392,000. The machine is…

A: The payback period is the length of time in which an investment reaches its break-even point. In…

Q: Tucker Manufacturing is considering investing in specialized equipment costing $841,000. The…

A: Net cash inflow and average net income are two different financial metrics used in capital budgeting…

Q: company is considering replacing an existing machine with a more modem one. Here are some of the…

A: Net Present Value (NPV) is a type of capital budgeting technique that helps in evaluating various…

Q: A new piece of equipment has a first cost of $300,000 with no salvage value. It will generate annual…

A: Cost of equipment = $ 300000 Life = 10 Years Salvage value = 0 Annual depreciation = (Cost - Salvage…

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A: Calculate Equivalent Annual Cost (EAC) for Different Useful LivesGiven:Initial cost of the new…

Q: The following data is associated with a proposed replacement project: A machine that originally cost…

A: Machine original cost =25,000 Life of assets =5 year Market value now= 12000 Tax rate =34%

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A: The payback period is generally used while evaluating the project, It indicates the period a project…

Q: A potential investment has a cost of $542,500 and a useful life of 7 years. Annual cash sales from…

A: 1) Calculation of NPV (in case of investment before tax):   Year 1 2 3 4 5 6 7   Sales 219202…

Q: Scholastic Co. is evaluating a machine with an initial cost of $450,000 and a five-year life that…

A: Net Present Value is that amount which is calculated with the help of future cash inflow and…

Q: Acorporation purchased a machine for $60,000 five years ago. It had an estimated life of 10 years…

A: Accounting: Accounting is a system, or a process of collecting and organizing economic transactions,…

Q: Scholastic Co. is evaluating a machine with an initial cost of $450,000 and a five-year life that…

A: Calculating the NPV (Net Present Value) of the project involves determining the cash flows…

Q: Company Q is considering a project which needs an equipment. The cost of the equipment is $350,000.…

A: Cash flows are the cash generated from the operation of the business organisation. In other words,…

Q: Enerlam Company purchased a machine with an estimated useful life of seven years. The machine will…

A: Net present value  = Present value of future cash inflows- initial investment

Q: Assume that a company purchased a new machine for $26,000 that has no salvage value. The machine is…

A:

Q: percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company's…

A: Aftertax salvage value refers to the amount of tax to be deducted from the sale price after the life…

Q: Lewis Enterprises is considering a project with an internal rate of return of 12%, an annual rate of…

A: Average investment = (Initial investment + Salvage value)/2 Annual rate of return = Annual net…

Q: Acme is considering the sale of a machine with a book value of $80,000 and 3 years remaining in its…

A: Cash flow is the amount of cash used or generated by the business enterprise at a given point. The…

Q: The Bruin's Den Outdoor Gear is considering a new 7-year project to produce a new tent line. The…

A: Project life = 7 yearsCost of equipment = $1.95 millionUnits = 30,500 tentsPrice = $78Variable costs…

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Q: GIVEN: Project C requires $800,000 net initial investment for new machinery with a 8-year life and a…

A: Initial Investment on machine = $800,000 Salvage Value = $40,000 Useful Life = 8 Years Straight Line…

Q: Compute the payback period and the Net Present Value at 10% discount rate, profit after tax for each…

A: Capital budgeting is similar to making long-term financial decisions. It all comes down to deciding…

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A: Fixed assets are those assets which are being held by business for longer period of time.…

Q: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,…

A: Net present value and Internal rate of return are the modern methods of capital budgeting that are…

Q: AR company is considering a new three-year project to build on the land they bought at 1 million…

A: Given  The cost of land is $1.5 million Tax rate is 35% WACC is 12%

Q: A company is considering replacing an existing machine with a more moden one. Here are some of the…

A: NPV means PV of net benefits which may arise from the project in coming years. It can be computed by…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.