TN - Excel Project 1 template- IS and BS SP24

3 Your firm needs a computerized machine tool lathe which costs $59,000 and requires $12,900 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category, and neither bonus depreciation nor Section 179 expensing can be used. Assume a tax rate of 21 percent and a discount rate of 12 percent. If the lathe can be sold for $5,900 at the end of year 3, what is the after-tax salvage value? (Round your answer to 2 decimal places.) Salvage value after tax $ 5,380.45X 4

Andres Gimenez is considering purchasing the DoublePlay 3000 machine. The machine will cost Ahmed $100,000 and he estimates it will last two years after which he will sell the machine for $30,000. The machine is considered specialty equipment under MACRS depreciation and depreciated over 4 years as shown below. The tax rate is 40%. Revenue Fixed Costs SG&A expenses Depreciation I EBIT Taxes Year 1 Year 2 $125,000 $ 125,000 $ 40,000 $ 40,000 20,000 20,000 33,333 44,450 $ 31,667 $ 20,550 8,220 12,667 Net Income $19,000 $ 12,330 1. What is the net present value of the investment, assuming an interest rate of 10%? 2. What is the internal rate of return of the investment?

Pisa Pizza Parlor is investigating the purchase of a new $45,000 delivery truck that would contain specially designed warming racks. Thenew truck would have a six-year useful life. It would save $5,400 per year over the present method of delivering pizzas. In addition, it would result in the sale of 1,800 more pizzas each year. The company realizes a contribution margin of $2 per pizza. Required: (Ignore income taxes.) 1. What would be the total annual cash inflows associated with the new truck for capital budgeting purposes? 2. Find the internal rate of return promised by the new truck to the nearest whole percent.

Biggerstaff Automotive Group is looking to replace their office printer. Option 1 costs $4,000 and costs $0.01 per sheet to print and will last 4 years. The printer will have zero salvage value and will be fully depreciated using straight-line depreciation over its expected life. The tax rate is 21% and the appropriate discount rate is 14%. Biggerstaff Automotive Group prints approximately 22,000 sheets annually and the printing costs are an operating expense of the firm.   What is the equivalent annual cost associated with Printer 1?

Your company decided to offer product delivery service and would need a truck for the delivery. You are evaluating the following two options. Option 1: Your company can lease a truck at a pretax cost of $27,000 per year. Option 2: Your company can buy a truck at a cost of $84,000, with annual pretax maintenance expenses of $14,000. The truck will depreciate to zero on a straight-line basis. The truck has a 4 years life and will have a salvage value of $18,000 at the end of its life. If the tax rate is 35% and the discount rate is 10%, which option would you prefer? (Hint: compute the equivalent annual cost (EAC).)

i will 10 upvotes urgent Your firm needs a computerized machine tool lathe which costs $56,000 and requires $12,600 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. The machine falls into the MACRS 3-year class life category. Assume a tax rate of 35 percent and a discount rate of 12 percent. Calculate the depreciation tax shield for this project in year 3.

AAA Shop is considering a project to improve their production efficiency. They are trying to decide whether it is a good idea or not to buy an automated injection molding machine which will result in reducing pre-tax costs by $500,000 for each of the next three years. The molding machine will cost $1,000,000 and the IRS says it must be depreciated as 3 year MACRS equipment. AAA Shop believes they can sell the machine for $80,000 at the end of three years. The molding machine will require an initial investment to increase inventoru by $34,000, and then an additional inventory increase of $3,000 for each succeeding year of the project. AAA's tax rate is 35% and uses a discount rate of 14%. AAA already spent $5,000 investigating the feasibility of using the machine. Please show your detailed work so that the NPV of the project is $52,215.89. What is the $5000 that AAA already spent investigating the feasibility of using the machine? What is the change in networking capital at the end of…

A cyber is planning on replacing its existing computers, which were purchased 2 years ago at a cost of $16.500. They could be sold today at $12.500. The depreciation period of this system is 5 years from the date of its purchase. New PCs could be bought for $18.000. Asume a 25% tax rate over profits. Calculate the book value of the old PCs Calculate the after-tax proceeds of its sale for $12.500 Calculate the initial investment associated with the replacement project.

Hey I'm having trouble with this problem, I'm not sure if 48,000 is pv or fv also I'm not sure if what to do with annual maintenance cost either. "Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. Machine A could be purchased for $48,000. It will last 10 years with annual maintenance costs of $1,000 per year. After 10 years the machine can be sold for $5,000.Machine B could be purchased for $40,000. It also will last 10 years and will require maintenance costs of $4,000 in year three, $5,000 in year six, and $6,000 in year eight. After 10 years, the machine will have no salvage value. Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations.Calculate the present value of Machine A & Machine B. Which machine Esquire should purchase?"

You install all new hardwood floors in your upscale ski resort. The total cost of the floor installation is $62,000. Instead of realizing the full expense in this fiscal year, you will depreciate the cost over the useful life of the floors. You expect the floors will have a useful life of 12 years, and the scrap value will be $1,000. Using straight line depreciation, how much depreciation should you recognize each year? O $4,000 O $5,083.33 $5,166.67 $6,200.10

4. A warehouse is currently sitting empty, but can be rented out to a third party for $100,000 a year. A project is proposed in the warehouse by your company which will require an investment of $200,000 and will be depreciated using MACRS over a five year life. At the end of the project in THREE YEARS, the machinery will be sold for $50,000. Products sold will be 20,000 units per year at $30 each. Variable costs will be 35 percent of sales. Fixed costs (not counting the warehouse) will be $20,000 per year. Working capital will be $50,000. The tax rate is 30 percent. If the interest rate is 10 percent, what is the NPV of this project?

•   Massey Machine Shop is considering a project to improve their production efficiency. They are trying to decide whether it is a good idea or not to buy an automated injection molding machine which will result in reducing pre-tax costs by $160,000 for each of the next four years. The molding machine will cost $480,000 and the IRS says it must be depreciated as 5-year MACRS equipment. Massey Machine Shop believes they can sell the machine for $70,000 at the end of four years. The molding machine will require an initial investment to increase inventory by $20,000, and then an additional inventory increase of $3,000 for each succeeding year of the project. Massey’s tax rate is 35% and uses a discount rate of 14%.

It is being decided whether the company is buying a delivery truck worth 25000 USD, which can be rented out to other warehouses in your area. For a useful life of 15 yrs, it is projected that you can earn as much as 3100 USD. At the end of its useful life, the salvage value is zero. Disregarding taxes, the ROR is projected to be approximately equal to: 7.1% 6.5% 5.3% 4.2% Other:

Beryl's Iced Tea currently rents a bottling machine for $52 000 per year, including all maintenance expenses. It is considering purchasing a machine instead and is comparing two options: a. Purchase the machine it is currently renting for $155 000. This machine will require $21 000 per year in ongoing maintenance expenses. b. Purchase a new, more advanced machine for $265 000. This machine will require $20 000 per year in ongoing maintenance expenses and will lower bottling costs by $15 000 per year. Also, $37 000 will be spent up front training the new operators of the machine. Suppose the appropriate discount rate is 8% per year and the machine is purchased today. Maintenance and bottling costs are paid at the end of each year, as is the rental of the machine. Assume also that the machines will be depreciated via the straight-line method over seven years and that they have a ten-year life with a negligible salvage value. The marginal corporate tax rate is 35%. Should Beryl's Iced Tea…