Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 11, Problem 11.12P
Summary Introduction
To determine:
The initial investment required for the purchase of the new grading machine.
Introduction:
The capital budgeting is the process of making huge investments by the firms to make their capital assets grow faster such as the building of new buildings, purchase of advanced costly machineries etc.
Book value is the strictly recorder value of an asset in the auditing book of the firm.
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Initial investment Basic calculation Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased 4 years ago at an installed cost of $ 19,700; it was being depreciated under MACRS using a 5-year recovery period. (See table for the applicable depreciation percentages.) The existing machine is expected to have a usable life of at least 5 more years. The new machine costs$ 34,100 and requires $ 5,200 in installation costs; it will be depreciated using a 5-year recovery period under MACRS. The existing machine can currently be sold for $ 25,000 without incurring any removal or cleanup costs. The firm is subject to a 40 % tax rate. Calculate the initial investment associated with the proposed purchase of a new grading machine. Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 3 years 5 years 7 years 10 years…
Initial investment-Basic calculation Cushing Corporation is considering the purchase of a new grading machine to replace
the existing one. The existing machine was purchased 3 years ago at an installed cost of $19,500; it was being depreciated
under MACRS using a 5-year recovery period. (See table E for the applicable depreciation percentages.) The existing
machine is expected to have a usable life of at least 5 more years. The new machine costs $34,700 and requires $4,800 in
installation costs; it will be depreciated using a 5-year recovery period under MACRS. The existing machine can currently be
sold for $24,600 without incurring any removal or cleanup costs. The firm is subject to a 40% tax rate. Calculate the initial
investment associated with the proposed purchase of a new grading machine.
The initial investment will be $. (Round to the nearest dollar.)
Data Table
(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a…
Initial investment Basic calculation Cushing Corporation is considering the purchase of a new grading machine to replace the existing one. The existing machine was purchased 4 years ago at an installed cost of $ 19,700; it was being depreciated under MACRS using a 5-year recovery period. (See table for the applicable depreciation percentages.) The existing machine is expected to have a usable life of at least 5 more years. The new machine costs$ 34,100 and requires $ 5,200 in installation costs; it will be depreciated using a 5-year recovery period under MACRS. The existing machine can currently be sold for $ 25,000 without incurring any removal or cleanup costs. The firm is subject to a 40 % tax rate. Calculate the initial investment associated with the proposed purchase of a new grading machine. Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes Percentage by recovery year* Recovery year 3 years 5 years 7 years 10 years…
Chapter 11 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 11.1 - Prob. 11.1RQCh. 11.1 - What three types of net cash flows may exist for a...Ch. 11.1 - Prob. 11.3RQCh. 11.1 - Prob. 11.4RQCh. 11.2 - Explain how to use each of the following inputs to...Ch. 11.2 - How do you calculate the book value of an asset?Ch. 11.2 - Prob. 11.7RQCh. 11.2 - Prob. 11.8RQCh. 11.3 - Prob. 11.9RQCh. 11.3 - Prob. 11.10RQ
Ch. 11.4 - Explain how the terminal cash flow is calculated...Ch. 11 - Book value, taxes, and initial investment Irvin...Ch. 11 - If Halley Industries reimburses employees who earn...Ch. 11 - Iridium Corp. has spent 3.5 billion over the past...Ch. 11 - Prob. 11.3WUECh. 11 - Prob. 11.4WUECh. 11 - Prob. 11.5WUECh. 11 - Prob. 11.1PCh. 11 - Net cash flow and time line depiction For each of...Ch. 11 - Replacement versus expansion cash flows Tesla...Ch. 11 - Sunk costs and opportunity costs Masters Golf...Ch. 11 - Prob. 11.5PCh. 11 - Prob. 11.6PCh. 11 - Prob. 11.7PCh. 11 - Book value and taxes on sale of assets Troy...Ch. 11 - Prob. 11.9PCh. 11 - Prob. 11.10PCh. 11 - Calculating initial investment Vastine Medical...Ch. 11 - Prob. 11.12PCh. 11 - Prob. 11.13PCh. 11 - Prob. 11.14PCh. 11 - Prob. 11.15PCh. 11 - Prob. 11.16PCh. 11 - Prob. 11.17PCh. 11 - Prob. 11.18PCh. 11 - Prob. 11.19PCh. 11 - Prob. 11.20PCh. 11 - Prob. 11.21PCh. 11 - Prob. 11.22PCh. 11 - Net cash flows for a marketing campaign Marcus...Ch. 11 - Net cash flows: No terminal value Central Laundry...Ch. 11 - Prob. 11.25PCh. 11 - Ethics Problem Cash flow projections are a central...
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