A wood products company has decided to purchase new logging equipment for $105,000 with a trade-in of its old equipment. The old equipment has a BV of $7,000 at the time of the trade-in. Its estimated SV at the time is expected to be $4000. Using the MACRS (GDS recovery period), if the equipment is sold in year four, what is the BV at the end of year four? Click the icon to view the partial listing of depreciable assets used in business. Click the icon to view the GDS Recovery Rates (rk). Choose the correct answer below. OA. The BV at the end of year four is $17,494. B. The BV at the end of year four is $41,983. C. The BV at the end of year four is $34,989. D. The BV at the end of year four is $3,226.
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- A wood products company has decided to purchase new logging equipment for $100,000 with a trade-in of its old equipment. The old equipment has a BV of $10,000 at the time of the trade-in. The new equipment will be kept for 10 years before being sold. Its estimated SV at the time is expected to be $5,000. Use this information to solve, Using the MACRS (GDS recovery period), if the equipment is sold in year five, the BV at the end of year five is equal to (a) $29,453 (b) $24,541 (c) $12,672 (d) $6,336.Cisco Systems is purchasing a new bar code–scanning device for its servicecenter in San Francisco. The table that follows lists the relevant cost items for this purchase. The operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be five years. The SV for depreciation purposes is equal to 25% of the hardware cost. Solve, a. What is the BV of the device at the end of year three if the SL depreciationmethod is used? b. Suppose that after depreciating the device for two years with the SL method, the firm decides to switch to the doubledeclining balance depreciation method for the remainder of the device’s life (the remaining three years). What is the device’s BV at the end of four years?A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues: Year 1: $50,000 Year 2: $50,000 Year 3: $50,000 Year 4: $50,000 The machine can be sold at the end of the year four for $25,000. Assume a discount for 8%. 1. What is the net present value (NPV)? Select one: A. -7890.99 B. 7899.99 C. -8,667.61 D. 9100.54 2. A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues: Year 1: $50,000 Year 2: $50,000 Year 3: $50,000 Year 4: $60,000 The machine can be sold at the end of the year for $25,000. Assume a discount of 8%. What is the compounded raturn (IRR) for this project?
- A business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues: Year 1: $50,000Year 2: $50,000Year 3: $50,000Year 4: $60,000The machine can be sold at the end of the year four for $25,000. Assume a discount of 8%. 1. What is the net present value(NPV)?Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 22% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (a) The cost basis of the device is $ (Round to the nearest dollar) (b) Annual depreciaitions and book values: (Round to the nearest dollar) 200% DB Year 1 2 3 4 Book values at end of year 4 SL 150% DB (...) 0 Cost Item Hardware Training Installation Cost $165,000 $15,000 $15,000Cisco Systems is purchasing a new bar code scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 25% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (a) The cost basis of the device is (Round to the nearest dollar) (b) Annual depreciaitions and book values: (Round to the nearest dollar) Year 1 2 3 4 Book values at end of year 4 SL $ 150% DB $ 200% DB $ $ C Cost Item Hardware Training Installation Cost $165,000 $16,000 $14,000
- A company plans to purchase a computer network control (CNC) machine for $650,000.00. If the company makes a profit from the products of the machine of $265,000.00 at years three and four and the company will be able to sell the machine at year four for $125,000.00 ( salvage value). The company wants to know if they will be able to recover the cost of the machine if the interest rate is 4% ? Provide them with the future value of the transactions to answer their question (if the number is negative it will not pay back, if it is positive it will). SOLVE IN EXCELA business is considering purchasing a piece of new equipment for $200,000. The equipment will generate the following revenues: year 1: $50,000 year 2: $50,000 year 3: $50,000 year 4: $60,000 The machine can be sold at the end of the year four for $25,000. Assume a discount of 8%. 1. What is the net present value (NPV)? A.) -7,890.99 B.) 7,899.99 C.) -8,667.61 D.) 9,100.51Cisco Systems is purchasing a new bar code - scanning device for its service center in San Francisco. The table on the right lists the relevant initial costs for this purchase. The service life of the system is 4 years and its salvage value for depreciation purposes is expected to be about 23% of the hardware cost. a. What is the cost basis of the device? b. What are the annual depreciations of the device if (i) the SL method is used? (ii) the 150% DB method is used? (iii) the 200% DB method is used? c. Calculate the book values of the device at the end of 4 years using all the methods above. Answers: (Round to the nearest dollar) (a) The cost basis of the device is $ (b) Annual depreciaitions and book values: (Round to the nearest dollar) Year 1 2 3 4 Book values at end of year 4 SL 69 69 69 69 69 150% DB 69 $ $ 200% DB 69 69 69 12 Cost Item Hardware Training Installation Cost $160,000 $16,000 $17,000
- Mwasalat Company wants to renovate one of its existing buses at cost of OMR 200,000 and the Company will incur a repair cost of OMR 20,000 at the end of 3rd year from now. If these costs are incurred, the bus will be useful for 6 years. After a 6-year period, it will be sold at a salvage value of OMR 30,000. The total annual revenues of the bus will be OMR 260,000 and the total cost to operate the bus will be OMR 170,000 per year. Alternatively, Mwasalat Company can purchase a new bus for OMR 190,000. The new bus will require some repairs at the end of the 6-year period at a cost of OMR15,000. Its salvage value will be OMR 40,000 after its useful life of 6 years. The total annual revenues of the new bus will be OMR 220,000 and its operating cost will be OMR 130,000 per year. The company’s required rate of return is 15% before taxes. A)Should Mwasalat Company renovate the old bus or purchase a new bus? Justify your answer. B)Would the above decision of Mwasalat Company will change if…Your plant manager wants you to buy a new lathe for $410000. The lathe should be useful to your company for 8 years at which point you plan to replace. The estimated salvage value at the end of the useful life is $20000. Using straight line depreciation what is the Book value when the asset is sold?Special Instrument company is considering replacing its machine with a new model that sells for $40,000, the cost of installation is $6,000. The old machine has been fully depreciated and has a $2500 salvage value. The new machine will be depreciated as a 3-year MACRS asset. Revenues are expected to increase $18,000 per year over the 5-year life of the new machine. At the end of 5 years the new machine is expected to have a $1500 salvage value. What is the NPV for this project if Special Instrument has a required rate of return of 12% and a marginal tax rate of 35%? Operating costs are not expected to increase from the current level of $8,000 per year. Briefly Discuss if you accept or reject the new machine and why.