Hudson Co. can purchase a machine for $190,000 and use it for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net income $12,800 $31,800 $76,000 $47,900 $127,200 Compute the machine's payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places.) Year Net Income Depreciation Net Cash Flow Cumulative Cash Flow 2$ (190,000) $ (190,000) 1 24 12,800 2 31,800 3 76,000 4 47,900 127,200 Payback period =

Hudson Co. can purchase a machine for $190,000 and use it for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net income $12,800 $31,800 $76,000 $47,900 $127,200 Compute the machine's payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places.) Year Net Income Depreciation Net Cash Flow Cumulative Cash Flow 2$ (190,000) $ (190,000) 1 24 12,800 2 31,800 3 76,000 4 47,900 127,200 Payback period =

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 6CE

See similar textbooks

Similar questions

A company has purchased a machine (CCA rate 24%) at $300,000 and has a tax rate of 33.00%. By how much will the NPV change if the company is able to obtain a $13,000 salvage value for its machine at the end of the project's life in Year 4? Assume a discount rate of 11.20% and that all else remains the same. Question 10Answer a. $8,502 b. $10,415 c. -$1,913 d. $6,589 e. $10,075
A machine can be purchased for $150,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied using a five-year life and a zero salvage value. Compute the machine’s payback period (ignore taxes). (Round the payback period to three decimals.) Year 1 Year 2 Year 3 Year 4 Year 5 Net income . $10,000 $25,000 $50,000 $37,500 $100,000
A machine can be purchased for $60,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net income $3,900 $9,900 $32,000 $14,700 $39,600 Compute the machine's payback period (ignore taxes). (Round your intermediate calculations to 3 decimal places and round payback period answer to 3 decimal places.) Year Net Income Depreciation Net Cash Flow Cumulative Cash Flow (60,000) $ (60,000) 1 $ 3,900 2 9,900 3 32,000 4 14,700 5 39,600 Payback period
A machine can be purchased for $150,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied using a five-year life and a zero salvage value. Compute the machine’s payback period (ignore taxes). (Round the payback period to three decimals.)
A machine can be purchased for $50,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $10,000. Income Year Year 1 $3,300 Initial invest Year 1 Year 2 Year 3 Year 4 Year 5 Year 2 $8,300 Compute the machine's payback period. Note: Round payback period answer to 2 decimal places. Net Income Depreciation 3,300 8,300 30,000 12,400 33,200 Year 3 $30,000 Year 4 $12,400 Net Cash Flow $ (50,000) $ Payback period = Year 5 $33,200 Cumulative Net Cash Flow (50,000) 0 0
A machine can be purchased for $284,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net income $ 19,000 $ 35,000 $ 67,000 $ 40,000 $ 126,000 Compute the machine’s payback period (ignore taxes). (Round payback period answer to 3 decimal places.)
NUBD Co. purchase a machine for P180,000, which will be depreciated on the straight-line basis over a five year period with no salvage value. The related cash flow from operations, net of income taxes, is expected to be P40,000, a year. Assume that NUBD’s effective income tax rate is 40% for all years.What is the payback period?
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
for this equipment. 0. Calculating Salvage Value Consider an asset that costs $635,000 and is depreciated straight-line to zero over its eight-vear tax life. The asset is to be used in a five-year project; at the end of the project, the asset can be sold for S105,000. If the relevant tax rate is 22 percent, what is the aftertax cash flow from the sale of this asset? LO 2
A company purchases an industrial laser for $140000. The device has a usetul e of 4 years and a salvage value (market value) at the end of those four years of S50.000. The beforetax cash fow is estimated to be $90,000 per You, of course, suggested applying the 3year MACRS (GDS) method instead of the straight ine method Given an effective tax rate of 24%. determine the depreciation schedule and the ater tax cash fow b. Based on the MAČRS depreciation schedule for this asset E the industrial laser was sold for S90.000 in year two (consider year bwo to be the "year 2" row in the table in Pan (a), what wilbe the amount of gain (depreciation recapture) or loss on the disposal of the asset at the end of this year? ye Cick the lcon to view the GOS Recovery Rates () for the 3year property class a. Determine the MACRS depreciation amounts and the ater tax cash flow for this laser. Fl in the table below (Round to the nearest dollar) Depreciation, S AICFS -140.000 EOY
Consider an asset cost 1.5 million and is depreciated straight ine to zero over its eight years tax life . The asset is to be used in a six year project and at the end of the project the asset can be sold for 250,000 $ . If the tax rate is 24 % calculate the after tax salvage of the asset
The ABC Company uses the after-tax MARR of 10% per year, and effective tax rate (T.) of 50%. A new machine has the following estimates: New Machine First cost ($) Annual operating cost ($/year) -15,000 -3,000 Salvage value ($) Life (years) 3,000 10 The machine is retained in use for 10 years, and then sold for the estimated salvage value. a. Complete the table below to find the cash flow after-tax (CFAT) in each year using the straight-line (SL) depreciation method over the 10-year life. b. Estimate the after-tax net present worth (NPW) using a MARR of 10% per year. Depreciation Taxable ($) Year Gross Initial CFBT Тахes CFAT ($) Expenses ($) Income Investment or ($) Income ($) ($) Salvage ($) -15,000 ($) - 0. - - 1 to 10 -3,000 -1500 - - 3,000 - 10 -