Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 13, Problem 18E
To determine
Whether the old machine should be replaced.
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QUESTION 7
An automated assembly robot that cost $378,000 has a depreciable life of 5 years with a $80,000 salvage value. The MACRS (Modified
Accelerated Cost Recovery System) depreciation rates for years 1, 2, 3, and 6 are 20.00%, 32.00%, 19.20%, and 5.76%, respectively.
What is the book value at the end of year 3? Year 5? Year 6?
The book value at the end of year 5, (in $)
Round to the nearest two (2) decimal places
Chapter 16: Depreciation Methods
Dude & Sons have just purchased a machine
for $325,000 and an additional $25,000
charge for installation onto a truck for
mobility. The expected life is 30 years with a
salvage value of 10% of the purchase price.
For classical straight-line depreciation
determine the first cost, salvage value, annual
depreciation amounts and book value after 20
years?
Problem 6-14 NPV and Bonus Depreciation
Tanaka Machine Shop is considering a 4-year project to improve its production
efficiency. Buying a new machine press for $475,000 is estimated to result in $199,000
in annual pretax cost savings. The press qualifies for 100 percent bonus depreciation,
and it will have a salvage value at the end of the project of $72,000. The press also
requires an initial Investment in spare parts inventory of $38,000, along with an
additional $4,000 in Inventory for each succeeding year of the project. The shop's tax
rate is 23 percent and its discount rate is 10 percent. Calculate the NPV of this project.
(Do not round intermediate calculations and round your answer to 2 decimal places,
e.g. 32.16.)
NPV
S 618,123.75
Should the company buy and install the machine press?
Yes
No
Chapter 13 Solutions
Survey Of Accounting
Ch. 13 - Prob. 1QCh. 13 - Prob. 2QCh. 13 - Prob. 3QCh. 13 - Prob. 4QCh. 13 - Prob. 5QCh. 13 - Prob. 6QCh. 13 - Prob. 7QCh. 13 - Prob. 8QCh. 13 - Prob. 9QCh. 13 - Prob. 10Q
Ch. 13 - Prob. 11QCh. 13 - Prob. 12QCh. 13 - Prob. 13QCh. 13 - Prob. 14QCh. 13 - Prob. 15QCh. 13 - Prob. 16QCh. 13 - Prob. 17QCh. 13 - Prob. 18QCh. 13 - Prob. 19QCh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Exercise 6-5AOpportunity costs Norman Dowd owns...Ch. 13 - Prob. 6ECh. 13 - Prob. 7ECh. 13 - Prob. 8ECh. 13 - Prob. 9ECh. 13 - Prob. 10ECh. 13 - Exercise 6-11AEstablishing price for an...Ch. 13 - Exercise 6-12AOutsourcing decision with...Ch. 13 - Exercise 6-13AOutsourcing decision affected by...Ch. 13 - Prob. 14ECh. 13 - Exercise 6-15ASegment elimination decision Dudley...Ch. 13 - Prob. 16ECh. 13 - Exercise 6-17AAsset replacementopportunity cost...Ch. 13 - Prob. 18ECh. 13 - Exercise 6-19A Asset replacement decision Mead...Ch. 13 - Exercise 6-20A Asset replacement decision Kahn...Ch. 13 - Exercise 6-21A Annual versus cumulative data for...Ch. 13 - Problem 6-23A Context-sensitive relevance Required...Ch. 13 - Problem 6-24A Context-sensitive relevance...Ch. 13 - Problem 6-25A Effect of order quantity on special...Ch. 13 - Problem 6-26A Effects of the level of production...Ch. 13 - Problem 6-28A Eliminating a segment Western Boot...Ch. 13 - Effect of activity level and opportunity cost on...Ch. 13 - Problem 6-30A Comprehensive problem including...Ch. 13 - Prob. 29PCh. 13 - ATC 6-1 Business Application Case Analyzing...Ch. 13 - ATC 6-2 Group Assignment Relevance and cost...Ch. 13 - Prob. 3ATCCh. 13 - Prob. 4ATCCh. 13 - Prob. 5ATC
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- Question 17 options: 8-7. Disposal of asset. Dump It is selling a machine that no longer is large enough for the production requirements. Dump It has had the machine for 3 years and has depreciated it using the straight-line method. Original cost had been $98,000, and salvage was estimated at $6,000. The machine had been expected to last for 8 years. (in all answers round to nearest dollar; do not use "$" or commas in your answer) Calculate the amount of annual depreciation on the asset. Calculate the amount of accumulated depreciation on the asset at the end of the third year. Calculate the book value of the asset at the end of the third year.arrow_forwardExercise 13-17A (Algo) Asset replacement decisions-opportunity cost LO 13-5 Jordan Freight Company owns a truck that cost $42.000 Currently, the truck's book value is $22,000, and its expected remaining useful life is five years. Jordan has the opportunity to purchase for $30100 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $5,600 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $10,000 Required Calculate the total relevant costs. Should Jordan replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out? Total relevant costs Should Jordan replace or continue the old truck? Keep Old Replace the old truck Replace With Newarrow_forwardProblem 9 A contractor is considering the following three alternatives: a. Purchase a new microcomputer system for $15,000. The system is expected to last 6 years with salvage value of $1,000. b. Lease a new microcomputer system for $3,000 per year, payable in advance. The system should last 6 years. c. Purchase a used microcomputer system for $8,200. It is expected to last 3 with no salvage value. Use a common-multiple-of-lives approach. If MARR of 8% is used, which alternative should be selected using a discounted present worth analysis? If the MARR is 12%, which alternate should be selected? yearsarrow_forward
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Fixed Asset Replacement Decision 1235; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=LJRzn9K8Nwk;License: Standard Youtube License