Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Question
Chapter 12, Problem 10P
To determine
Calculate the expected present worth.
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Students have asked these similar questions
Assuming a agricultural water project that has an initial investment of 1 billion RMB and a time frame of
5 years, with a predicted 0.8 billion RMB/year revenue and operation fee 0.45 billion RMB plus 25% of
enterprise income tax. If to adopt the straight-line depreciation method, the weighted mean capital cost
is 10%. According to the corresponding equations mentioned above, the project can get its investment
NPV, EVA and accumulative economic value added (MVA) (Table 1).
Table 1: NPV and EVA investment decision analysis of agricultural water project (unit: 10 thousand RMB)
Time (year)
100000
Initial investment
Operation income
Operation cost
Depreciation
80000
80000
80000
80000
80000
45000
45000
45000
45000
45000
20000
20000
20000
20000
20000
3750
11250
3750
11250
31250
Income taxation
3750
3750
3750
11250
31250
NOPAT
11250
11250
After-tax cash flow
31250
31250
31250
NPV
18462
Capital cost
EVA
10000
10000
10000
10000
10000
1250
1250
1250
1250
1250
MVA
18462
Present its feasibility…
What is the net effect on a project's NPV, if it's
salvage value in 10 years increases from
$24126 to $48252? Assume the discount rate
is 8%, the CCA rate is 14.1%, the tax rate is
25%, and the half-year rule applies.
a) $6734
b) $12520
c) $9393
d) $11262
e) $16860
Clark Company's master budget includes $348,000 for equipment depreciation. The master budget was prepared for an
annual volume of 116,000 chargeable hours. This volume is expected to occur uniformly throughout the year. During
September, Clark performed 8,500 chargeable hours and recorded $25,500 of depreciation.
Required:
1. Determine the flexible-budget amount for equipment depreciation in September.
2. Compute the spending variance for the depreciation on equipment. Was the variance favorable (F) or unfavorable (U)?
(Leave no cell blank; if there is no effect enter "O" and select "None" from dropdown.)
3. Calculate the fixed overhead production volume variance for depreciation expense in September. Was this variance
favorable (F) or unfavorable (U)? (Leave no cell blank; if there is no effect enter "0" and select "None" from dropdown.)
1. Flexible-budget amount
2.
3. Production volume variance
Spending variance equipment depreciation
Chapter 12 Solutions
Engineering Economy (17th Edition)
Ch. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - A new snow making machine utilizes technology that...Ch. 12 - Prob. 4PCh. 12 - Prob. 5PCh. 12 - Prob. 6PCh. 12 - Prob. 7PCh. 12 - Prob. 8PCh. 12 - Prob. 9PCh. 12 - Prob. 10P
Ch. 12 - Prob. 11PCh. 12 - Prob. 12PCh. 12 - Prob. 13PCh. 12 - Prob. 14PCh. 12 - Prob. 15PCh. 12 - Prob. 16PCh. 12 - Prob. 17PCh. 12 - Prob. 18PCh. 12 - Prob. 19PCh. 12 - Prob. 20PCh. 12 - Prob. 21PCh. 12 - Prob. 22PCh. 12 - If the interest rate is 8% per year, what decision...Ch. 12 - Prob. 24PCh. 12 - Prob. 25PCh. 12 - Prob. 26SE
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