Cost$150,000Training$17,000Installation$15,000Cisco Systems is purchasing a new bar code - scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of thesystem is 4 years and its salvage value for depreciation purposes is expected to be about 28% of the hardware cost.Cost ItemHardwarea. What is the cost basis of the device?b. What are the annual depreciations of the device if(i) the SL method is used?(ii) the 150% DB method is used?(iii) the 200% DB method is used?c. Calculate the book values of the device at the end of 4 years using all the methods above.Answers:(a) The cost basis of the device is $☐ (Round to the nearest dollar)(b) Annual depreciaitions and book values: (Round to the nearest dollar)SLYear12$34Book values at$end of year 4150% DB☐200% DB$$

In tax computations, salvage value is taken into account. Depreciation costs are deducted from…

Cisco Systems is purchasing a new bar code-scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 28% of the hardware cost. a. What is the cost basis of the device? What are the annual depreciations of the device if (i) the SL method is used? (i) the 150% DB method is used? (i) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (a) The cost basis of the device is $☐ (Round to the nearest dollar) (b) Annual depreciations and book values: (Round to the nearest dollar) Year 1 2 3 Book values at end of year 4 SL 150% DB 200% DB CETTE Cost Item Hardware Cos $150, Training $17, Installation $15,

Cisco Systems is purchasing a new bar code-scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 28% of the hardware cost. a. What is the cost basis of the device? What are the annual depreciations of the device if (i) the SL method is used? (i) the 150% DB method is used? (i) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (a) The cost basis of the device is $☐ (Round to the nearest dollar) (b) Annual depreciations and book values: (Round to the nearest dollar) Year 1 2 3 Book values at end of year 4 SL 150% DB 200% DB CETTE Cost Item Hardware Cos $150, Training $17, Installation $15,

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Engineering Economics Two stamping machines are under consideration for purchase by a metal recycling company. The manual model will cost P1,250,000 to buy with an eight-year life and a P250,000 salvage value. Its annual operating costs will be P800,000. A computer-controlled model will cost P4,750,000 to buy and it will have a twelve-year life if upgraded at the end of year six for 750,000. Its terminal salvage value will be P1,150,000, with annual operating costs of P375,500 for labor and P125,000 for maintenance. The company's minimum attractive rate of return is 18%. Compute manually the Present Worth with Cash flow diagram of the (2) models. Compare the results. Don't use excel
The Fence Company is setting up a new production line to create top rails. The relevant data for two alternatives are shown below. Flow Line Manufacturing Cell Installed Cost Expected Life Salvage Value Variable Cost per Top Rail Click here to access the TVM Factor Table Calculator $15,000 5 years $0 $6.00 $10,000 5 years $0 $7.00
A new machine with a purchase price of $90,429.00, with transportation costs of $9,194.00, installation costs of $5,756.00, and special acquisition fees of $2,100.00. Calculate a cost basis. Select the correct answer. $90,429.00 $98,285.00 $107,479.00 $96,185.00
Current Attempt in Progress BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do, Estimates regarding each machine are provided below. Original cost Estimated life i Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A Profitability index $78,300 Which machine should be purchased? 8 years $19,700 $5,040 Machine A 0 should be purchased Click here to view the factor table Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. Of the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). Round answer for present value to O decimal places, s 125 and profitability index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided) Machine B $185,000 8 years 0…
Assume that a company is choosing between two alternatives-keep an existing machine or replace it with a new machine. The costs associated with the two alternatives are summarized as follows: Purchase cost (new) Remaining book value Overhaul needed now Existing Machine $ 15,000 $ 6,000 $ 5,000 New Machine $ 22,000 Annual cash operating costs Salvage value (now) Salvage value (eight years from now) $6,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. If the company overhauls its existing machine, it will be usable for eight more years. If it buys the new machine, it will be used for eight years. Assuming a discount rate of 13%, what is the net present value of the cash flows associated with keeping the existing machine? $ 10,500 $ 2,000 $1,000 $ 7,000
Required information Nuclear safety devices installed several years ago have been depreciated from a first cost of $200,000 to zero using the Modified Accelerated Cost Recovery System (MACRS). The devices can be sold on the used equipment market for an estimated $15,000, or they can be retained in service for 5 more years with a $9000 upgrade now and an operating expenses (OE) of $6000 per year. The upgrade investment will be depreciated over 3 years with no salvage value. The challenger is a replacement with newer technology at a first cost of $40,000, n = 5 years, and S= 0. The new units will have operating expenses of $7000 per year. Use a 5-year study period, an effective tax rate of 41%, an after-tax minimum acceptable rate of return (MARR) of 18% per year, and an assumption of classical straight line depreciation (no half-year convention) to perform an after-tax AW-based replacement study. The annual worth of the defender is determined to be $| The annual worth of the challenger…
Marine Industrial Coatings, Inc. is considering replacing its existing computer system with a new computer system. The new system can offer considerable savings in computer processing and inventory management costs. Information about the existing system and the new system follow: Existing Computer New Computer Original cost $10,000 $15,000 Annual operating cost $3,500 $2,000 Current salvage value of the existing system $4,000 --- Remaining life in 5 years 5 years 5 years Salvage value in 5 years $0 $0 Should Marine Industrial Coatings replace the existing computer system with the new system? What are the cash flow savings or additional cost over the 5 years? Ignore income taxes.
Plz use excel and show formula !!!!!!! Benson Enterprises is deciding when to replace its old machine. The machine’s current salvagevalue is $1.2 million. Its current book value is $1 million. If not sold, the old machine will requiremaintenance costs of $420,000 at the end of the year for the next five years. Depreciation on theold machine is $200,000 per year. At the end of five years, it will have a salvage value of $220,000.A replacement machine costs $3.5 million now and requires maintenance costs of $160,000 at theend of each year during its economic life of five years. At the end of five years, the new machinewill have a salvage value of $540,000. It will be fully depreciated using the three-year MACRSschedule. In five years a replacement machine will cost $4,000,000. Pilot will need to purchasethis machine regardless of what choice it makes today. The corporate tax is 35 percent and theappropriate discount rate is 10 percent. The company is assumed to earn sufficient revenues…
BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided below. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value. Machine A $76,600 Profitability index 8 years Which machine should be purchased? $19,900 $4,890 Machine A 0 Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) should be purchased. Machine B $179,000 8 years 0 $40,400 $9,940 Machine…
Required information DVH Technologies purchases several parts for the instruments it makes via a fixed-price contract of $162,000 per year from a local supplier. The company is considering making the parts in-house through the purchase of equipment that wll have a first cost of $232,0000 with an estimated salvage value of $30,000 after 5 years. The AOC is difficult to estimate, but company engineers have made optimistic, most likely, and pessimistic estimates of $67000, $85.000, and $120,000, respectively. The MARR Is 20% per year. Use factors to determine if the company should purchase the equipment under any of the AOC scenarios. The AW value for the optimistic scenario is $- and the company should make O the parts for the optimistic scenario The AW value for the most likely scenario is $- and the company should makeO the parts for the most likely scenario The AW value for the pessimistic scenario is $- and the company should purchase the parts for the pessimistic scenario
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.
Required information A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $163,000, a salvage value of $55,000, a life of 10 years, a maintenance cost of $32,000 per year, and an operating cost of $220 per day. Alternatively, the company can rent the necessary equipment for $1010 per day and hire a driver at $180 per day. When approached to rent for the breakeven number of days, the equipment owner indicated that the minimum rental is for 100 days per year; however, he might consider a lower daily rental cost. What is the daily rental cost to justify renting over purchasing? If the equipment was purchased, assume it would be used for the breakeven number of days. Determine the required rental cost per day. The daily rental cost to justify renting over purchasing is determined to be $