Bailey Corporation is considering the elimination of one of its segments. The following fixed costs pertain to the segment. If the segment is eliminated, the building it uses will be sold. Annual advertising expense Market value of the building Annual depreciation on the building Annual maintenance cost on equipment Annual real estate taxes on the building Annual supervisory salaries $180,000 $30,000 $20,000 $26,000 $8,000 $72,000 Annual allocation of companywide facility-level cost $30,000 Original cost of the building Current book value of the building Required: $75,000 $54,000 Based on this information, determine the amount of avoidable costs associated with the segment.

Laurman, Inc. is considering the following project: Required investment in equipment Project life Salvage value The project would provide net operating income each year as follows: Sales Variable expenses Contribution margin Fixed expenses: $2,205,000 7 225,000 $2,750,000 1,600,000 $1,150,000 Salaries, rent and other fixed out-of pocket costs Depreciation Total fixed expenses Net operating income. Company discount rate Required: $520,000 350,000 870,000 $280.000 18% (Use cells A4 to C18 from the given information, as well as 824, and A30 to D45 to complete this question. Negative amounts or amounts to be deducted should be input as negative values and will display in parentheses.) 1. Compute the annual net cash inflow from the project. 2. Complete the table to compute the net present value of the investment. $630,000 nitial investment „Annual cost savings Salvage value of the new machine Total cash flows Discount factor Present value of the cash flows Net present value Use Excel's PV…

Dangerfield Industrial Systems is trying to determine which one of two conveyor belt systems to be purchased.   tax rate of 34% and required return =11% System A B Investment cost 430,000 570,000 Life [years] 4 6 Annual operating cost [pretax] 110,000 98,000   Both systems to be depreciated using straight line to zero value over useful life and will have no salvage value.   Which project should if chosen, if system is NOT replaced at the end of useful life?

Steel insulators is analyzing solution general accounting question

Should WMM lease or construct their own production facility Option 1: Construct Costs to incur: Actual expenditure towards buying land,  construct building and getting ready for use                       $ 500,000Taxes, insurance, and repairs (per year)                                 $ 20,000Intended years of use                                                                          18Projected market value in 18 years                                     $ 1,000,000 Budgeted maximum expenditure towards buying land,  construction of building and getting ready for use.            $ 500,000Remainder in four payments of;                                             $ 175,000Option 2:                                                                                           LeaseIntended years of use                                                                         18First lease payment due now                                                  $ 100,000Rest of the lease payments…

Unequal Lives Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: Machine 190-3, which has a cost of $220,000, a 3-year expected life, and after-tax cash flows (labor savings and depreciation) of $97,000 per year; and Machine 360-6, which has a cost of $320,000, a 6-year life, and after-tax cash flows of $93,400 per year. Knitting machine prices are not expected to rise, because inflation will be offset by cheaper components (microprocessors) used in the machines. Assume that Filkins's cost of capital is 12%. Calculate the two projects' extended NPVs. Do not round intermediate calculations. Round your answers to the nearest dollar. Machine 190-3: $   Machine 360-6: $   Should the firm replace its old knitting machine? If so, which new machine should it use? The firm -Select-should replace its old knitting machine with Machine 190-3should replace its old knitting machine with Machine 360-6should not replace…

The company DstriBut.inc decides to take a technological shift by replacing its old distribution center with a new one that is more oriented towards technology and less dependent on manpower. The entire installation is estimated at $6,000,000 amortized at the rate of 30% decreasing. An immediate expense of $30,000 (taxable and non-depreciable) is planned to ensure the training of the personnel who will operate on the new installations. This investment creates a working capital requirement of $400,000, fully recoverable. The company estimates to increase its operating cash flow by $1,500,000 before tax. On the other hand, the company must assume an expense for the maintenance and replacement of consumable components of new installations in the amount of $50,000 every 2 years. This investment will have a residual value of $2,500,000 at the end of the investment horizon, which is set at 5 years by senior management. The tax rate is 40% and the rate of return required by senior management…

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Zenith Investment Company is considering the purchase of an office property. It has done an extensive market analysis and has estimated that based on current market supply or demand relationships, rents, and its estimate of operating expenses, annual NO/ will be as follows: Year 1 12345678 ΝΟΙ $ 1,105,000 1,105,000 1,105,000 1,235,000 1,285,000 1,335,000 1,374,000 1,414,170 A market that is currently oversupplied is expected to result in cash flows remaining flat for the next three years at $1,105,000. During years 4, 5, and 6, market rents are expected to be higher. It is further expected that beginning in year 7 and every year thereafter, NOI will tend to reflect a stable, balanced market and should grow at 3 percent per year indefinitely. Zenith believes that investors should earn a 12 percent return (r) on an investment of this kind. Required: a. Assuming that the investment is expected to produce NO/ in years 1 to 8 and is expected to be owned for seven years and then sold, what…

Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: Machine 190-3, which has a cost of $190,000, a 3-year expected life, and after-tax cash flows (labor savings and depreciation) of $87,000 per year; and Machine 360-6, which has a cost of $360,000, a 6-year life, and after-tax cash flows of $98,300 per year. Knitting machine prices are not expected to rise because inflation will be offset by cheaper components (microprocessors) used in the machines. Assume that Filkins’ cost of capital is 14%. Should the firm replace its old knitting machine? If so, which new machine should it use? By how much would the value of the company increase if it accepted the better machine? What is the equivalent annual annuity for each machine?