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Citrus2011 [14]
3 years ago
6

Stanton Inc. is considering the purchase of a new machine that will reduce manufacturing costs by $5,000 annually and increase e

arnings before depreciation and taxes by $6,000 annually. Stanton will use the Modified Accelerated Cost Recovery System (MACRS) method to depreciate the machine, and it has estimated the depreciation expense for the first year as $8,000. What is the supplemental operating cash flow for the first year?
Business
1 answer:
iris [78.8K]3 years ago
6 0

Answer:

$9,800

Explanation:

The computation of the supplemental operating cash flow for the first year is shown below:-

For computing the supplemental operating cash flow for the first year first we need to follow some steps to reach the answer which is here below:-

Total Inflows = Annual savings in cost + Increase in earning

= $5,000 + $6,000

= $11,000

Earnings before tax = Total Inflows - Depreciation

= $11,000 - $8,000

= $3,000

Tax = Earnings before tax × 40%

= $3,000 × 40%

= $1,200

Earning after tax = Earnings before tax - Tax

= $3,000 - $1,200

= $1,800

Cash flow in year 1 = Earning after tax + Depreciation

= $1,800 + $8,000

= $9,800

So, for computing the cash flow in year 1 we simply added earning after tax with depreciation.

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Cathrine Corporation acquired a machine for $26,000, and has recorded depreciation for 3 yearsusing the straight-line method ove
Gemiola [76]

Answer:

$2,000

Explanation:

Net book value at the end of the 3rd year=26,000-((26,000-2,000/6)*3)

                                                                     =$14,000

Since the useful life of machine is now revised from the 6 years to 10 years, therefore the total remaining useful life of machine is now 7 years instead of 3 years and accordingly the depreciation from year 4 to year 10 shall be calculated as follows:

Depreciation per year from year 4 to year 10=*14,000-0)/7=$2,000

           

6 0
3 years ago
From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have
Vilka [71]

Answer:

a) Marginal cost of waiting is greater than the marginal benefit of being served

Explanation:

For an economic perspective, customer leave a fast food restaurant as they find the marginal cost of waiting is higher than the cost of marginal benefit of being served at restaurant.

Marginal cost: In economics, it is a cost that is incurred for an additional unit of benefit received out of certain action or activity.

Marginal benefit: It is a benefit received for an additional unit of cost incurred during the activity taken place.

Therefore, customer have done analysis on the benefit of waiting in a queue for getting served at restaurant, which he found that marginal cost is greater than the marginal benefit of being served.

4 0
3 years ago
According to the chart below, which sets of IQ scores fall in the bottom 50th percent of frequency?
lubasha [3.4K]
The green one
Because 65-69 is close to 50%
And the answer should be A
I
Think
Hope this helps
6 0
3 years ago
Read 2 more answers
Caroline's manager notices that she exhibits an internal locus of control when she speaks about her work. her manager should ___
Ymorist [56]
Her manager should provide incentives such as merit pay or sales <span>commissions.
Internal locus of control means that Caroline believes that her actions directly affect the consequences of those actions, which is why providing her with such incentives would have a great impact on Caroline and her work, and she would be even more productive.
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4 0
3 years ago
Cazden Motors' stock is trading at $30 a share. Call options on the company's stock are also available, some with a strike price
slava [35]

Answer:

d. If Cazden's stock price rose by $5, the exercise value of the options with $25 strike price would also increase by $5.

Explanation:

A call option confers a right, not an obligation upon the call buyer to buy a security at a pre determined price, known as exercise price or strike price at a future date.

A call buyer would exercise his right only in the scenarios wherein the strike price is lesser than the current market price on maturity.

Profit of a call buyer is given by = CMP as on expiry - Exercise/Strike price - Option premium paid

wherein CMP=  Current Market Price

A call option is "in the money" when it's strike price is less than it's current market price. In the given case, it means if the CMP today represents CMP upon expiry, call buyer would exercise his right and his gain would be $5 i.e $30 - $25.

Since the $25 exercise option is "in the money", an increase in stock price by $5 will also increase the strike price by $5.

 

8 0
3 years ago
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