Swifty's Accounting Museum is exploring the purchase of a new building with a useful life of 20 years to use as its main gallery space. The building will cost $1,369,200. Once it has been purchased, the museum will terminate its current lease, which costs $69,000 per year. The new gallery will allow the museum to display more of its permanent collection, as well as to showcase traveling exhibits. The increased exhibit space, along with the new building's location, is expected to increase admissions revenue by $28,800 per year. Calculate the payback period for the proposed investment in the building.

Blossom, Inc. is considering the purchase of a warehouse directly across the street from its manufacturing plant. Blossom currently warehouses its inventory in a public warehouse across town. Rent on the warehouse and delivering and picking up inventory cost Blossom $48960 per year. The building will cost Blossom $459000. Blossom will depreciate the building for 20 years. At the end of 20 years, the building will have a $127500 salvage value. Blossom’s required rate of return is 11%. suggest whether he should buy warehouse

Ogren Corporation is considering purchasing a new spectrometer for the firm's R&D department. The purchase price is $70,000 and it would cost another $15,000 to install it. The spectrometer which falls into the MACRS 3-year property class (Year 1-33.33%, Year 2 - 44.44%, Year 3 - 14.82%, and Year 4 - 7.41%) is projected to be sold after three years for $30,000. Use of this equipment would result in an increased net working capital of $4,000 over the life of the machine. The spectrometer would have no effect on revenues, but it is expected to save the firm $35,000 per vear in before-tax operating costs, mainly labor. The firm's tax rate is 40%, and the required rate of return on the project is 11%. What is the after-tax salvage value for the spectrometer?

Ogren Corporation is considering purchasing a new spectrometer for the firm’s R&D department.  The purchase price is $70,000 and it would cost another $15,000 to install it.  The spectrometer which falls into the MACRS 3-year property class (Year 1 - 33.33%, Year 2 - 44.44%, Year 3 - 14.82%, and Year 4 - 7.41%) is projected to be sold after three years for $30,000.  Use of this equipment would result in an increased net working capital of $4,000 over the life of the machine.  The spectrometer would have no effect on revenues, but it is expected to save the firm $35,000 per year in before-tax operating costs, mainly labor.  The firm’s tax rate is 40%, and the required rate of return on the project is 11%.               What amount should be used as the initial cash flow for this project? Why?

Ogren Corporation is considering purchasing a new spectrometer for the firm's R&D department. The purchase price is $70,000 and it would cost another $15,000 to install it. The spectrometer which falls into the MACRS 3-year property class (Year 1-33.33%, Year 2 - 44.44%, Year 3 - 14.82%, and Year 4 - 7.41%) is projected to be sold after three years for $30,000. Use of this equipment would result in an increased net working capital of $4,000 over the life of the machine. The spectrometer would have no effect on revenues, but it is expected to save the firm $35,000 per year in before-tax operating costs, mainly labor. The firm's tax rate is 40%, and the required rate of return on the project is 11%. What amount should be used as the initial cash flow for this project? Why? Short Answer Toolbar navigation

Ogren Corporation is considering purchasing a new spectrometer for the firm's R&D department. The purchase price is $70,000 and it would cost another $15,000 to install it. The spectrometer which falls into the MACRS 3-year property class (Year 1- 33.33%, Year 2- 44.44%, Year 3 - 14.82%, and Year 4 - 7.41%) is projected to be sold after three years for $30,000. Use of this equipment would result in an increased net working capital of $4,000 over the life of the machine. The spectrometer would have no effect on revenues, but it is expected to save the firm $35,000 per year in before-tax operating costs, mainly labor. The firm's tax rate is 40%, and the required rate of return on the project is 11%. What is the NPV of the project? Should the firm accept or reject this project?

The Parkview Hospital is considering the purchase of a new autoclave. This equipment will cost $150,000. This asset will be depreciated using an MACRS (GDS) recovery period of three years. Use this information to solve, The BV at the end of the second year is (a) $27,771 (b) $41,667 (c) $116,675 (d) $33,325

Larson Manufacturing is considering purchasing a new injection-molding machine for $250,000to expand its production capacity. It will cost anadditional $20,000 to do the site preparation. Withthe new injection-molding machine installed, Larson Manufacturing expects to increase its revenueby $90,000. The machine will be used for five years,with an expected salvage value of $75,000. At aninterest rate of 12%, would the purchase of the injection-molding machine be justified?

Nguyen, Inc., is considering the purchase of a new computer system (ICX) for $130,000. The system will require an additional $30,000 for installation. If the new computer is purchased, it will replace an old system that has been fully depreciated. The new system will be depreciated under the MACRS rules applicable to 7-year class assets. If the ICX is purchased, the old system will be sold for $20,000. The ICX system, which has a useful life of 10 years, is expected to increase revenues by $32,000 per year over its useful life. Operating costs are expected to decrease by $2,000 per year over the life of the system. The firm is taxed at a 40 percent marginal rate.a. What net investment is required to acquire the ICX system and replace the old system?b. Compute the annual net cash flows associated with the purchase of the ICX system.

Tinney & Smyth Inc. is considering the purchase of a new batch polymer-bonding machine for producing Crazy Rubber, a new children's toy. The machine will increase EBITDA by $215,000 per year for the next two years. The machine's purchase price is $260,000 and the salvage value at the end of two years is $46,800. The machine is classified as 3-year property with MACRS depreciation rates for the first two years of 33.33% and 44.45%. What is the tax on sale associated with selling the machine after two years? Use a tax rate of 35%. Round to the nearest dollar. Check Answer