1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Eduardwww [97]
3 years ago
8

A company is analyzing the replacement of a color copier. The old machine was purchased 3 years ago for $30,000; it falls into t

he MACRS 5-year class; and it has 2 years of remaining life and an $8,000 salvage value 2 years from now. The current market value of the old machine is $17,000. The new machine has a price of $40,000, plus an additional $2,000 for installation and modification and an additional $2,000 for transportation. The new machine falls into the MACRS 5-year class, has a 2-year economic life, and can be salvaged for $23,000. The new machine will require a $7,000 increase in inventory, and accounts payable is expected to increase by $4,000. The new machine is expected to increase revenue by $8,000 per year and decrease costs by $3,000 per year. The firm has an 11 percent cost of capital and a marginal tax rate of 25 percent. The MACRS 5-year class uses the following percentages: 20%, 32%, 19%, 12%, 11%, and 6% (in that order). (Round all CFs to the nearest dollar.) What is the total net cash outflow at Year 0
Business
1 answer:
Alekssandra [29.7K]3 years ago
8 0

Answer:

E. Outflow of $32,075

Explanation:

<h2>At Year 0, the cash outflow is calculated as under:</h2>

Year 1 Outflow = Investment in the New asset (Step1) + Net working capital required  (Step2) - Sale Proceeds from the old machine  (Step3) -  Tax On the sale of old Machinery  (Step4)

Year 1 Outflow = $44,000 + $3,000 - $17,000 + $2,075 = $32,075

<h2><u>Step 1:  Investment in the New asset</u></h2>

Now here:

Investment in the New Asset = New machine cost + Transportation of asset + Installation of asset

By putting values, we have:

Investment in the New Asset = 40000 + 2000 + 2000 = $44,000

<h2><u>Step 2: Net working capital required</u></h2>

Now

Net working capital required = $7,000 Investment in Inventory - $4,000 Increase in payables = $3,000

<h2><u>Step 3: Sale Proceeds from the old machine</u></h2>

Fair Value of the Old Machine is $17000 which means this would be the sales proceeds on the old machinery's sales.

<h2><u>Step 4: Tax On the sale of old Machinery</u></h2>

Old machine purchased 3 year ago at = $30,000

Depreciation schedule and book value of old machine are as follows:

Year            1             2           3           4           5           6

MACRS Rate   20%       32%      19%       12%       11%           6%

Depreciation  6000     9600    5700    3600     3300      1800

Acc. depre.     6000    15600   21300   24900  28200    30000

Book value    24000   14400    8700     5100     1800          0

Now

From the table we can see that the Book value of the asset at the end of the year 3 is $8,700.

Tax on the gain of the asset = ($17,000 - 8,700) * 25% = $2,075

You might be interested in
The Pinetop Corporation issues 1,000 shares of 6%, $100 par value preferred stock at the beginning of 2014. All remaining shares
lidiya [134]

Answer:

$12,000 and $6,000

Explanation:

For computing the dividend, first we have to find out the yearly dividend which is shown below:

= Number of shares × par value per share × dividend rate  × number of years

= 1,000 shares × $100 × 6%  × 2 years

= $12,000

Out of $18,000, the $12,000 will be paid to preferred stockholders and the remaining $6,000 will be paid to common stockholders

5 0
3 years ago
At the beginning of 2017, your company buys a $34,000 piece of equipment that it expects to use for 4 years. The equipment has a
Elodia [21]

Answer:

32,000

8000

see below

.16

see below

Explanation:

I'm not really sure what the schedule is supposed to look like (im not good at accounting) exactly but i whipped up something real quick in excel and if you have any questions ask

the depreciable cost is just cost-salvage (the amount that's going to be depreciated) so for us its 34000-2000 or 32,000

the depreciation expense is just the depreciable cost divided by the useful live (32,000/4)=8000

see my attempt at a depreciation schedule below

The deprecation rate per unit is the depreciable cost divided by the total units

32000/200000= .16

and you can see below my attempt at the units of production schedule

4 0
3 years ago
Someone who diversifies investments is more likely to
AnnZ [28]

Answer:

offset their losses with gains.

Explanation:

8 0
3 years ago
Read 2 more answers
The Daniel and Kim Lee filed a joint return for 2019. They provide more than 50% of the support of Carla, Ellie, and Albert. Car
lapo4ka [179]

Answer:

don't know how to help you with your answer sssssorryyyyyyy

4 0
2 years ago
A closeout report is primarily used to
BigorU [14]

Answer:

draft the summary of a project plan and the performance efficiency of it.

Explanation:

A closeout report is primarily used to "draft the summary of a project plan and the performance efficiency of it."

Closeout report is a means of preparing an analysis of a project plan, including the result, in which the differences, pros, and cons, are listed out.

It also contains the performance rating or measure to determine the level of success of a project plan.

8 0
3 years ago
Other questions:
  • Change agentry may be an especially useful technique for
    11·1 answer
  • ​Heidi, Sergei,​ Shou-Ju, and Jesus form a general partnership to operate a sporting equipment store. After their first store is
    14·1 answer
  • Does being unemployed apply to someone who has never been employed
    8·1 answer
  • Mikey is very picky and insists that his mom make his breakfast with equal parts of cereal and apple juice any other combination
    10·1 answer
  • An annuity Question 6 options:
    15·2 answers
  • What is a partial refund of the purchase price of an item? A. Pretext B. Sale C. Rebate D. Phishing
    12·1 answer
  • A 60-year-old man develops lung cancer, and sues the manufacturer of an asbestos-containing material. The man worked in construc
    9·1 answer
  • Use the drop-down menus to complete the steps for creating a subform.
    11·1 answer
  • When workers are able to augment their stock of human capital, they can expect to?
    15·1 answer
  • during the 1970s, some economists argued that the cause of the woes of the economy were due to . a.) increase in unemployment, a
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!