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olga2289 [7]
3 years ago
9

A company uses the declining-balance method of calculating depreciation expense.On January 1, the company buys machinery for $75

0,000. The machinery has a salvage value of $100,000 and an estimated service life of 10 years.What is the book value in Year 3?
Business
1 answer:
elixir [45]3 years ago
5 0

Answer:

Book value for the 3rd year = $ 750,000 - $366,000 = $ 384,000

Explanation:

Straight line rate= 100 % ÷ Useful Life = 100 ÷ 10= 10 %

Double Declining rate = 2 * Straight Line rate= 2 * 10= 20 %

Depreciation expense= Double  declining balance rate * Beginning period book value

Depreciation expense for the first year =    20 % $ 750,000= $ 150,000

Book value for the first year = $ 750,000 - $ 150,000= $ 600,000

Depreciation expense for the 2nd year =    20 % $ 600,000= $ 120,000

Book value for the 2nd year = $ 750,000 - $ 270,000= $ 480,000

Depreciation expense for the 3rd year =    20 % $ 480,000= $ 96,000

Book value for the 3rd year = $ 750,000 - $366,000 = $ 384,000

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1. efficient decision making, by owner only
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4 0
3 years ago
A student deposits $1,642 in the bank that pays 6.2% interest yearly (using yearly compounding). After 5 years he withdraws the
tamaranim1 [39]

Answer:

the perpetuity will pay the student 166.36 dollar per years

Explanation:

First, we solve for the amount of the original investment after 5 years:

Principal \: (1+ r)^{time} = Amount

Principal 1,642.00

time 5.00

rate 0.06200

1642 \: (1+ 0.062)^{5} = Amount

Amount 2,218.17

<u>Then, this goes into a perpetual annuity at 7.5%</u>

2,218.17 x 0.075 = 166.3630983 = 166.36

the perpetuity will pay the student 166.36 dollar per years

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3 years ago
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3 years ago
Read 2 more answers
A city sells $15 million of general obligation bonds on October 1, 2019. The bonds mature at the rate of $1 million a year each
alexgriva [62]

Answer:

The multiple choices are:

a.$15,000,000

b.   $14,000,

c.    $13,750,000

d.   $0

The correct option is D,$0

Explanation:

The city by all standards should have adopted a modified accrual basis of accounting where amounts owed in terms of principal and interest payments are not recorded in the necessary books of accounts until they become due.

As at 30,2020,the amount due in respect of the loan has been recorded and paid off,hence as at 31st December,2020,no amount is due in respect of the general obligation bonds issued,hence no recording would be effected until next obligation date when the amount to be paid is due

4 0
3 years ago
Norris Co. has developed an improved version of its most popular product. To get this improvement to the market, will cost $48 m
lubasha [3.4K]

Answer:

NPV = $1.49  million

Explanation:

<em>The NPV is the difference between the PV of cash inflows and the PV of cash outflows. A positive NPV implies a good investment decision and a negative figure implies the opposite.  </em>

<em>NPV of an investment:  </em>

NPV = PV of Cash inflows - PV of cash outflow  

But we will need to work out the discount rate to be used for discounting the cash flows. Hence, we need to determine the cost of capital as follows:

Step 1: After-tax cost of debt

After tax cost of debt = pre-tax cost of debt × (1-tax rate rate)

                                 = 9%× (1--0.3)=6.3%

Step 2 : Weighted Average cost of capital (WACC)

WACC=( 0.25×6.3%) + (0.75× 13%) =11.325 %

Step 3:Net Present Value (NPV)

PV of cash inflow= (1- (1.11325^-5)/0.11325)× 13.5 = 49.49  million

Initial cost = $48 million

NPV = 49.49  million -  $48 million  =$1.49  million

NPV = $1.49  million

7 0
3 years ago
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