EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 9, Problem 4P
a)
Summary Introduction
To determine: The project’s net investment.
b)
Summary Introduction
To determine: The annual straight-line
C)
Summary Introduction
To determine: The MACRS depreciation.
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Jonhson Products is considering purchasing a new milling machine that costs
$100,000. The machine’s installation and shipping costs will total $2,500. If accepted,
the milling machine project will require an initial net working capital investment of
$20,000. Johnson plans to depreciate the machine on a straight-line basis over a
period of 8 years about a year ago, Jonhson paid $10,000 to a consulting firm to
conduct a feasibility study of the new milling machine. Jonhson’s marginal tax rate is
40 percent.
a. Calculate the project’s net investment (NINV)
b. Calculate the annual straight-line depreciation for the project.
1. Johnson Products is considering purchasing a new milling machine
that costs $100,000. The machine's installation and shipping costs will
total $2,500. If accepted, the milling machine project will require an initial
net working capital investment of $20,000. Johnson plans to depreciate
the machine on a straight-line basis over a period of 8 years about a
year ago, Johnson paid $10,000 to a consulting firm to conduct a
feasibility study of the new milling machine. Johnson's marginal tax rate
is 40 percent.
a. Calculate the project's net investment (NINV)
b. Calculate the annual straight-line depreciation for the project.
Coyote Co. is building a waste landfill in the desert between Arizona and California. Coyote estimates that this landfill will be in operation for five years, will cost $250 million to build, and will generate $800 million in revenues during its useful life. Federal law requires that Coyote decommission and decontaminate the site at the end of its useful life. A team of engineers has studied the decontamination procedure and has estimated that Coyote will have to spend $15 million on the decommissioning process when the landfill is shut down in five years. Coyote’s credit-adjusted rate of interest is 10%. Use tables (PV of 1, PVAD of 1, and PVOA of 1) (Use the appropriate factor(s) from the tables provided.)
Required:
1-a. Prepare the entry required for the recognition of any ARO asset and liability.
1-b. Prepare an amortization table.
Chapter 9 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 9.A - Prob. 1QTDCh. 9.A - Prob. 1PCh. 9.A - Prob. 2PCh. 9.A - Prob. 3PCh. 9.A - Prob. 4PCh. 9.A - Prob. 5PCh. 9 - Prob. 1QTDCh. 9 - Prob. 2QTDCh. 9 - Prob. 3QTDCh. 9 - Prob. 4QTD
Ch. 9 - Prob. 5QTDCh. 9 - Prob. 6QTDCh. 9 - Prob. 7QTDCh. 9 - Prob. 8QTDCh. 9 - Prob. 9QTDCh. 9 - Prob. 10QTDCh. 9 - Prob. 11QTDCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Prob. 6PCh. 9 - Prob. 7PCh. 9 - Prob. 8PCh. 9 - Prob. 9PCh. 9 - Prob. 10PCh. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - Prob. 13PCh. 9 - Prob. 14PCh. 9 - Prob. 15PCh. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22P
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