money should the company set aside now to cover all the repair costs
Q: Hayden Inc. has a number of copiers that were bought four years ago for $30,000. Currently…
A: We have to consider the after tax salvage value of the old machine at the intervals given to…
Q: hing supplies, a cor immediately inves 5,000 in new equip end of Years two an e will have to be a r…
A: In this we have to determine the present value of cash flow and find out net present value.
Q: Covidam Company clinches a contract to supply cleaning services to a nursing home for the next 5…
A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…
Q: Bridgeport Company manufactures a check-in kiosk with an estimated economic life of 12 years and…
A: Lease- A binding legal agreement whereby one part, holding ownership of an asset agrees to rent the…
Q: An investor is considering purchasing an office building for $5 million with the intention of…
A: To calculate the discounted payback period, we need to find the point in time when the present value…
Q: Benford Inc. is planning to open a new sporting goods store in a suburban mall. Benford will lease…
A: Initial cost = $250,000Sales = $0.7 million increase @6%Operating expenses = $650,000 increase…
Q: Emerson developed a new style of camping trailer. He is considering a licensing agreement with…
A: Step 1:Since the payments are made yearlybut interest rate is compounded semi-annually is 5.9%. We…
Q: series during those five years to provide the amount to be paid directly. What is the amount of…
A: Loan Amount: It refers to the amount of credit provided by the lender to the borrower. The borrower…
Q: A shirt factory has just installed a boiler. It is expected that there will be no maintenance…
A: Here, To Find: Present value of money at time zero =?
Q: Direct Energy has two options for upgrading a natural gas power station to meet new government…
A:
Q: TJ & Parents Inc. has recently decided to go ahead with a new operating system for their business.…
A: The question is based on the concept of capital budgeting for taking lease or buying decision.…
Q: Your client, Albert Lee Leasing Company, is preparing a contract to lease a machine to Souvenirs…
A: The annuity factor of 12% for 25 years is determined to be 7.8431, based on the factor table. Thus,…
Q: An industrial plant manager decided to purchase a new generator through financing at a cost of…
A: Amortization is an accounting technique used to periodically lower the book value of a loan or an…
Q: BBL Inc. is considering an equipment for its new factory. It can either purchase the equipment for…
A: In the given question we are provided with the information of BBL Inc. With the given information in…
Q: A new equipment costs $20,000. The following information is also available: Operating costs…
A: 1st year, calculation of NPV Time 0 ($) 1 ($) Initial cost -20000 Operating cost…
Q: Hayden Inc. has a number of copiers that were bought four years ago for $26,000. Currently…
A:
Q: Sunland Company manufactures a check-in kiosk with an estimated economic life of 12 years and leases…
A: For the lessee, a sales-type lease might function as a type of asset finance. The lessee can…
Q: Your client, Keith Pearl Leasing Company, is preparing a contract to lease a machine to Souvenirs…
A: Lease is an agreement between the owner of the property or asset and other party who wants to use…
Q: A company is planning to borrow $200,000 from a bank to finance the purchase of a new pressure…
A: As per the concept of time value of money the worth of money changes with passage of time as money…
Q: Cool Brews is looking to expand it's brewpub empire with a new location. The building that Cool…
A: Annuity refers to series of equalized payments that are either made start or end of definite…
Q: onca Co. is looking for financing to expand its laboratory and buys a patent for a new technology…
A: Amount of note payable that should be recorded is = issue of note - down payment
Q: A crane was recently purchased by a local construction company to assist with the construction of…
A: The net amount of cash that an entity receives and expends throughout a given period. For a business…
Q: The owner of a ski resort estimates that a new 4-person ski lift will cost $4,000,000. The owner…
A: For accounting purposes, when an investor needs to make an investment in any project or asset and…
Q: Compute the unknown annual revenues to reach equilibrium on the cash flow series over the service…
A: Time value of money (TVM) refers to the method used to measure the amount of money at different…
Q: The Rosco company is purchasing a new machine that will increase revenue for 8 years. The purchase…
A: Solution- Given that Purchase price=$2,45,900 Working capital=$55,000 Service in 3rd and 6th year…
Q: Since 1970, Super Rise, Incorporated, has provided maintenance services for elevators. On January 1,…
A: The recognition of revenue for service contracts typically depends on the terms of the contract and…
Q: Delta Electric Company expects to have an annual taxable income of $500,000 from its residential…
A:
Q: Barbara Thompson is considering the purchase of a piece of business rental property containing…
A: Given information: Initial investment on a property is $350,000. An annual receipt as rent is…
Q: An equipment that currently costs $750,000 is needed for construction at the project site for 5…
A: Considering cash flow from Lease and Purchase of equipment Assumption of equipment being sold…
Q: Wildhorse Company manufactures a check-in kiosk with an estimated economic life of 10 years and…
A: The lease will be called a "Sales Type Lease". It is so because the lease term of the asset is more…
Q: Your firm plans on purchasing an existing rental property with a remaining service life of 30 years.…
A: The term "annuity" relates to insurances sold by financial firms with the objective of repaying out…
Q: Hayden Inc. has a number of copiers that were bought four years ago for $25,000. Currently…
A: After tax salvage value After tax salvage value is calculated as shown below. After tax…
Q: • Smalltown, PA currently has a $38,000/year contract with a private company to transport students…
A: Internal rate of return is the rate at which present value of future cash inflows or savings or…
Q: Yummy Food is expanding its business and wants to open a new facility to make frozen lasagna, which…
A: Lease payment is the rentals to be paid by the lessee for using the asset of the lesser for certain…
Q: One Company has offered a small company two method by which to pay for some needed roof repairs.…
A: Method 1 Payment = 16500 Method 2 Payment = 26400 Time Period of payment = 2 years Interest Rate =…
Q: Your client, Albert Almora Leasing Company, is preparing a contract to lease a machine to Souvenirs…
A: Present Value: The value of today’s amount to be paid or received in the future at a compound…
Q: Benford Inc. is planning to open a new sporting goods store in a suburban mall. Benford will lease…
A: Net annual cash flow The flow of cash into and out of a business is called cash flow. The difference…
Q: Star Studios is looking to purchase a new building for its upcoming film productions. The company…
A:
Q: 1. Samos Excavating is considering purchasing some new equipment for the company. Due to the expense…
A: Capital Budgeting: Capital budgeting decisions are the most important decision in corporate…
Q: A contractor's price for a new building was $116,000. You decide to buy the building, making a…
A: Payment of loan is given by L = E(1-(1+r)-n)/r Therefore, L = loan taken = 116000 - 23200 = 92800…
Q: Compute the amount of each of the following items. (Round present value factor calculations to 5…
A: Manufacturer Lessor:Manufacturers or dealers frequently provide customers with the option of either…
Q: Callis Construction LLC is planning to expand its site planning division 4 years from now. In order…
A: The present value of a cash flow is the current worth of a cash flow series at a certain rate of…
A construction company recently purchased a crane with a 6-year warranty that covers maintenance and repairs. The company plans on using the crane for 15 years, and wants to set aside money now to pay for the repairs once the warranty expires. The repair costs are expected to average $13,500 a year at the 7th year and beyond, with a large overhaul cost of $20,000 in the 9th year of operation and another overhaul cost of $35,000 in the 12th year of operation. Assuming an interest rate of 4%, answer the following questions:
How much money should the company set aside now to cover all the repair costs for the 15-year lifespan?
( Ans: $115,237.39, can someone explain how it got to this . please I need stepwise solution )
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Direct Energy has two options for upgrading a natural gas power station to meet new government standards.Option 1: Direct Energy will make the upgrades themselves. This is expected to cost $12,000 at the end of every three months for 14 years. At the end of the operation (in 14 years) Direct Energy expects to sell all equipment needed for the upgrade for $105,000.Option 2: Pay experienced contractors. This will cost $39,000 up front and $14,200 quarterly for 10 years.Assume all interest is 2.33% compounded quarterly. Round the answers to NPV (Option 1), and NPV (Option 2) to the nearest dollar. Round all other answers to two decimal places where applicable. 1) Find the net present value of option 1: Payments (Cost) Sale of equipment (Residual) P/Y = C/Y = N = I/Y = % % PV = $ $ PMT = $ $ FV = $ $ (If the NPV is negative, enter it as a negative number. If the NPV is zero, enter 0.) NPV (Option 1) = $2) Find the net present value of option 2:…Concord Pacific is considering purchasing a small residential building in Abbotsford that will cost $1,700,000 and will require $120,000 in renovations immediately. Revenue from rent is estimated to be $500,000 a year. Expenses are estimated to be $200,000 a year. They plant to keep the building for 6 years and estimates they will be able to sell the building for $2,200,000 at the end of 6 years. Assume expenses occur at the beginning of the year and revenue at the end of the year. Concord wants to earn at least 18% per year. Concord has calculated the NPV of this project is -$81,683.54. To encourage businesses to invest, the provincial government is considering giving Concord a one-time tax credit payable at the end of 2 years. How large of a tax credit does Concord require if they want to earn at a minimum of 18% per year?s
- A southwestern city has a contract with Firestone Vehicle Fleet Maintenance to provide maintenance services on its fleet of city-owned vehicles such as street sweepers, garbage trucks, backhoes, and carpool vehicles. The contract price is fixed at $75, 000 per year for 4 years What are the maintenance costs in each of the following 4 years in constant dollars with base year of today? Assume current market interest rate of 10% per year and inflation rate of 6% per year over the following 4-year period. Include both a CFD in actual dollars and a CFD in constant dollars.Delta Electric Company expects to have an annual taxable income of $500,000 from its residential accounts over the next two years. The company is also bidding on a two-year wiring service job for a large apartment complex. This commercial service requires the purchase of a new truck equipped with wirepulling tools at a cost of $50,000. The equipment falls into the MACRS five-year class and will be retained for future use (instead of being sold) after two years, indicating no gain or loss on this property. The project will bring in additional annual revenue of $200,000, but it is expected to incur additional annual operating costs of $100,000. Compute the marginal tax rates applicable to the project'soperating profits for the next two years.Henredon purchases a highprecision programmable router for shaping furniture components for $190,000. It is expected to last 12 years and have a salvage value of $5,000. Henredon will borrow $100,000 at 13% over 6 years, paying only interest each year and paying all the principal in the 6th year. It will produce $45,000 in net revenue each year during its life. All dollar amounts are expressed in real or constant dollars. Depreciation follows MACRS 7-year property, taxes are 25%, the real after-tax MARR is 10%, and inflation is 3.9%. Solve, a. Determine the then-current or actual after-tax cash flows for each year. b. Determine the PW of the after-tax cash flows. c. Determine the AW of the after-tax cash flows. d. Determine the FW of the after-tax cash flows. e. Determine the combined IRR of the after-tax cash flows. f. Determine the combined ERR of the after-tax cash flows. g. Determine the real IRR of the after-tax cash flows. h. Determine the real ERR of the after-tax cash flows.
- The Titanic Shipbuilding Company has a noncancelable contract to build a small cargo vessel. Construction involves a cash outlay of $270,000 at the end of each of the next two years. At the end of the third year, the company will receive payment of $620,000. The company can speed up construction by working an extra shift. In this case, there will be a cash outlay of $584,000 at the end of the first year followed by a cash payment of $620,000 at the end of the second year. Use the IRR rule to show the (approximate) range of opportunity costs of capital at which the company should work the extra shift. Note: Enter your answers as a percent rounded to 2 decimal places. Enter the smallest percent first. The company should work the extra shift if the cost of capital is between % and %.Crane Excavating Inc. is purchasing a bulldozer. The equipment has a price of $103,000. The manufacturer has offered a payment plan that would allow Crane to make 10 equal annual payments of $18,229.37, with the first payment due one year after the purchase. (a) How much total interest will Crane pay on this payment plan? (Round answer to 0 decimal places, e.g. 458,581.) Total interestWildhorse Company manufactures a check-in kiosk with an estimated economic life of 10 years and leases it to Sheffield Chicken for a period of 9 years. The normal selling price of the equipment is $172,124, and its unguaranteed residual value at the end of the lease term is estimated to be $26,200. Sheffield will pay annual payments of $20,800 at the beginning of each year. Wildhorse incurred costs of $141,100 in manufacturing the equipment and $2,400 in sales commissions in closing the lease. Wildhorse has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 5%. Sheffield Chicken has an incremental borrowing rate of 5%. The lessor's implicit rate is unknown to the lessee.
- On January 3, 2020, Gagne Inc. paid $320,000 for a computer system. In addition to the basic purchase price, the company paid a setup fee of $2,500, $6,400 sales tax, and $21,100 for special installation. Management estimates that the computer will remain in service for five years and have a residual value of $20,000. The computer will process 50,000 documents the first year, decreasing annually by 5,000 during each of the next four years (that is 45,000 documents in 2021, 40,000 documents is 2022, and so on). In trying to decide which depreciation method to use, the company president has requested a depreciation schedule for each of three depreciation methods (straight-line, units-of-production, and double-diminishing-balance). Before completing the straight-line depreciation schedule, calculate the straight-line depreciation rate. First, select the labels for the formula and then compute the rate. (Round the rate to two decimal places.) Date January 3, 2020 December 31, 2020 December…Yummy Food is expanding its business and wants to open a new facility to make frozen lasagna, which requires a new automated lasagna maker. A lasagna maker can be purchased for $350,000 or leased under a finance lease over 7 years, with lease payments to be made at the beginning of each year. If the company purchases the lasagna maker, it can be fully depreciated to zero using the straight-line method over seven years. The management expects the scrap/residual value of the lasagna maker to be $60,000 at the end of the lease. After a detailed analysis of the project, Yummy Food determines the appropriate after-tax cost of capital of the project to be 15% per annum. Yummy Food pays a corporate tax rate of 28% and it can borrow funds at a before-tax interest rate of 5% per annum. All cash-flows have been quoted on a before-tax basis. Given this information, what is the lease payment (per annum) that would make Yummy Food indifferent between leasing and borrow-to-buy the machine? (Using…Blackstone Company purchased a new software system costing $35,000. To finance the purchase, Blackstone signed a contract agreeing to pay the cost over the next 8 years, with a payment due every six months; the first payment will be made six months from the date of purchase. Blackstone's usual interest rate is 10%. What is the amount of the payment required (rounded to the nearest dollar)? 's usual 096, What is the amount of the Select one: O a. 16,030 O b. 6,560 O c. 3,229 d. 2,575 e. None of the above
