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OleMash [197]
3 years ago
13

The management of urbine corporation is considering the purchase of a machine that would cost $340,000 would last for 4 years, a

nd would have no salvage value. the machine would reduce labor and other costs by $80,000 per year. the company requires a minimum pretax return of 9% on all investment projects. (ignore income taxes in this problem.) click here to view exhibit 13b-1 and exhibit 13b-2 to determine the appropriate discount factor(s) using tables. the net present value of the proposed project is closest to: (round discount factor(s) to 3 decimal places, intermediate and final answers to the nearest dollar amount.)
Business
1 answer:
attashe74 [19]3 years ago
3 0

The net present value of the proposed project is closest to -$80,822.

Since the project saves $80,000 in costs each year, we treat these savings income for the next 4 years. We then calculate the Present value Interest Factor of an annuity using the formula :

PVIF of an annuity = { [ 1 - [ (1+r)⁻ⁿ ] } ÷ r

PVIF of an annuity = { [ 1 - [ (1.09)⁻⁴ ] } ÷ 0.09

PVIF of an annuity = 3.240 (rounded to three decimals)

PV of the cost savings = (3.240*80000) = $2,59,178 (rounded to nearest $)

NPV = PV of cost savings - Value of investment

NPV = 2,59,178 - 3,40,000

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The BVM Corp., construction company, purchased a used hybrid electric pickup truck for 30,000 and used MACRS depreciation in the
Alina [70]

Answer:

The BVM Corp.

The After-tax Rate of Return for the truck = After-Tax Income/Investment in Truck x 100

= $10,200/$30,000 x 100 = 34%

Explanation:

a) Calculations:

Current Value of the Truck =

Sale of Truck =             $9,000

Savings from Truck = $38,000 ($9,500 x 4)

Total                           $47,000

Investment increase  = $17,000 ($47,000 - 30,000)

Combined Tax = $6,800 (40% x $17,000)

After Tax Income = $10,200 ($17,000 - 6,800)

b) MACRS means the modified accelerated cost recovery system.  It is an allowance by the IRS for faster depreciation in the first years of an asset's life and the depreciation slows later on in order to allow a business to recover the cost basis of certain assets that deteriorate over time.

c) Rate of return (ROR) is the percentage increase or decrease of an investment (truck) over a set period of time (4 years), which is calculated by taking the difference between the current (or expected) value ($47,000) and original value ($30,000), dividing by the original value, and then this is multiplied by 100.

3 0
3 years ago
Finders Investigative Services is an investigative services firm that is owned and operated by Stacy Tanner. On June 30, 2019, t
ra1l [238]

Answer:

Net Profit   121,500

Stacy Tanner, Capital 483,300

Explanation:

Finders Investigative Services

End-of-Period Income Statement

For the Year Ended June 30, 2019

Service Fees                                                     $  ~ 718,000

Rent Revenue                                                      ~ 12,000

                                                                            730,000

Salaries Expense                     ~ 522,100

Rent Expense                          ~ 48,000

Supplies Expense                     ~ 10,800

Depreciation Expense-Building ~ 8,750

Utilities Expense                          ~ 7,150

Repairs Expense                         ~ 3,000

Insurance Expense                     ~ 2,500

Miscellaneous Expense              ~ 6,200                         608,500

Net Profit                                                                        $121,500

Finders Investigative Services

End-of-Period Owner's Equity

For the Year Ended June 30, 2019  

Stacy Tanner, Capital                             $ ~ 373,800

<u>Add Income                                             121,500             495,300   </u>

<u>Less Drawing                                                 12,000</u>

<u><em>Stacy Tanner, Capital                                                  $  483,300</em></u>

Finders Investigative Services

End-of-Period Balance Sheet

For the Year Ended June 30, 2019

Balance

Account Title                                       ~ Dr.                      Cr. ~

Cash                                                 ~ 28,000

Accounts Receivable                        ~ 69,600

Supplies                                              ~ 4,600

Prepaid Insurance                              ~ 2,500

Building                                            ~ 395,300

Accounts Payable                                                              ~ 11,700

Salaries Payable                                                                ~ 3,000

Unearned Rent                                                                  ~ 2,000

Stacy Tanner, Capital                                                      ~ 483,300

                                                   $  500,000                   $  500,000

Journal Entries

1) Income Summary     $ 608500 Dr

Salaries Expense                     ~ 522,100 Cr

Rent Expense                          ~ 48,000 Cr

Supplies Expense                     ~ 10,800 Cr

Depreciation Expense-Building ~ 8,750 Cr

Utilities Expense                          ~ 7,150 Cr

Repairs Expense                         ~ 3,000 Cr

Insurance Expense                     ~ 2,500 Cr

Miscellaneous Expense              ~ 6,200 Cr

2)     Service Fees                     $  ~ 718,000 Dr

Rent Revenue                            ~ 12,000 Dr

          Income Summary                           $ 730,000 Cr

3) Income Summary  $121,500 Dr

Stacy Tanner Capital Account               $ 121,500 Cr

4) Stacy Tanner Capital Account           $ 12,000 Dr

Stacy Tanner Drawings                  $ 12000 Cr

5 0
2 years ago
Lenders are prohibited from
boyakko [2]
Taking money from others
3 0
3 years ago
Assume the weekly payroll of the Abbott Company is $5,000. December 31, the end of the year, falls on a Wednesday and Abbott wil
Crank

Answer:

Salary Expense A/c Dr.            $3,000

           To Salary Payable A/c                 $3,000

Since salary will be paid on Friday therefore, liability is recorded as salary payable.

Explanation:

As for the provided details,

The working week consists of 5 working days.

Thus, salary expense will be allocated to these 5 working days only. As the salary expense for a week = $5,000

That means salary expense for a day = $5,000/5 = $1,000 for each day.

Now, the financial year ends on December 31 which is Wednesday.

That means three days, of the working week, fall in the financial year.

Therefore, salary expense for the year will be = $1,000 \times 3 = $3,000

Thus, entry for this will be:

Salary Expense A/c Dr.            $3,000

           To Salary Payable A/c                 $3,000

Since salary will be paid on Friday therefore, liability is recorded as salary payable.

3 0
2 years ago
ABC and XYZ are identical firms in all respects except for their capital structures. ABC is all-equity financed with $530,000 in
densk [106]

Answer:

b. 11.74; 14.47

Explanation:

For Cost of Equity:

COE = (EBIT - Interest - Taxes) / Total Equity

ABC Company: EBIT = $62,222, Equity = $530,000, Debt = 0, Tax = 0

COE = ($62,222 - 0 - 0) / $530,000

COE = 11.74

XYZ Company: EBIT = $62,222, Equity = $310,000, Debt = $220,000, Tax = 0, Interest Rate = 7.9% (0.079)

COE = [$62,222 - ($220,000*0.079) - 0] / $310,000

COE = ($62,222 - $17380) / $310,000

        = $44842 / $310,000

        = 14.465 ≈ 14.47

5 0
3 years ago
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