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Vinvika [58]
3 years ago
6

A firm is considering purchasing an asset that will have a useful life of 15 years and cost​ $7.5 million; it will have installa

tion costs of​ $300,000 and a salvage or residual value of​ $1,800,000. What is the annual straight minus line depreciation for this​ asse
Business
1 answer:
emmasim [6.3K]3 years ago
8 0

Answer:

The annual straight line depreciation for this​ asset is $400,000

Explanation:

Total cost of the asset = Purchased cost + installation costs

= $7,500,000 +  $300,000 = $7,800,000

The firm uses the straight-line depreciation method, Depreciation Expense each year is calculated by following formula:  

Annual Depreciation Expense = (Cost of Asset − Salvage Value )/Useful Life  

In there, the asset will have salvage value of $1,800,000 and useful life of 15 years

Annual Depreciation Expense = ($7,800,000 - $1,800,000)/15 = $6,000,000/15 = $400,000

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Axiom International, an Australian company, wants to expand its operations to China, a country that is politically, culturally,
RSB [31]

Answer:

B. Joint venture

On a Joint venture, Axiom will have partner which share the risk and cost of the project.

Also this partners can be local companies with knowledge ofthe Chinese market.

Axiom will have limited liability until his contribution.

It will generate new jobs in the country and include local business persons, this will be politically acceptable

This option has everything Axiom is looking for.

Explanation:

<em>A.- if Axiom uses a subsidiary</em> it will not have access to local knowledge. Also it will be the same entity, so it won't be sharing the cost.

It won't be what the company need

<em>C.- if exporting</em> it will not be expanding inside the country. Also it will not provide local knowledge or share the cost with a third party. The goverment may create additional tariff or market cuota or any other barrier to protect national companies.

It won't be what the company need

<em>E.- Licensing: </em>will be selling the brand name or product to a third party. It will not be part of the revenue stream entirely. A third party with knowledge of the market will exploit the benefit.

<em>D. Greenfield investments: </em>The company will establishes operations on the country. It will have a high cost, but will get the goverment approval for the jobs created in China. However it will be Axiom who takes the cost and risk for the entire investment.

These two are partially suitable, but with some backwards

6 0
3 years ago
How does consumer law damage business?
kherson [118]

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3 0
2 years ago
The following exchange demonstrates which problem solving technique?We pay higher costs than we need to when we go bowling becau
zlopas [31]
A.Fishbone Diagram because that's the answer
6 0
3 years ago
Read 2 more answers
We are evaluating a project that costs $644,000, has an eight-year life, and has no salvage value. Assume that depreciation is s
AleksandrR [38]

Solution :

a).

Particulars                                                Details

Selling price per unit                                 37

Less : variable cost per unit                     -21

Margin per unit                                           16

No. of units sold per unit                       70,000

Gross margin                                        11,20,000

Less : fixed cost                                     - 7,25,000

Profit before depreciation and tax       3,95,000

Less : depreciation                                -80,500

Profit before tax                                     3,14,500

Less : Tax                                               -1,10,075

Net profit per year                                 2,04,425

Project Cost                                           6,44,000

Accounting breakeven point in years     3.15

b).

Calculating the base Cash - Cash flow and NPV

Particulars                                                       Amount

Net profit per year                                        2,04,425

Add : depreciation                                         80,500

Base Cash cashflow                                     2,84,925

Required rate of return                                    15%

Present value of base cash cash flow        12,78,550

received in 8 years.

Project cost                                                  -6,44,000

NPV                                                               6,34,550

The present value of base cash cash flow received in 8 years is calculated as Present value of annuity received at the end of each year $ 2,84,925 at the rate of interest 15% for a period of 8 years.

The sensitivity of the NPV to 500 units decrease in projected sales :

Particulars                                                          Details

Selling price per unit                                            37

Less : variable cost per unit                                -21

Margin per unit                                                     16

Number of units sold per year                          69,500

Gross margin                                                      11,12,000

Less : fixed cost                                                -7,25,000

Profit before depreciation and tax                   3,87,000

Less : depreciation                                            -80,500

Profit before tax                                                 3,06,500

Less : tax                                                            -1,07,275

Net profit per year                                             1,99,225

Add : depreciation                                              80,500

Base Cash cashflow                                          2,79,725

Required rate of return                                         15%

Present value of base cash cash flow              12,55,216

received in 8 years.

Project cost                                                    -6,44,000

NPV                                                                6,11,216

Original NPV                                                  6,34,550

Sensitive NPV                                                  -23,334

c).

Particulars                                                              Details

Selling price per unit                                               37

Less : variable cost per unit                                   -20

Margin per unit                                                        17

No. of units sold per year                                     70,000

Gross Margin                                                         11,90,000

Less : fixed cost                                                     -7,25,000

Profit before depreciation and tax                       4,65,000

Less : Depreciation                                                -80,500

Profit before tax                                                     3,84,500

Less : tax                                                                -1,34,575

Net profit per year                                                  2,49925

Add : depreciation                                                   80,500

Operating cash flow                                               3,30,425

Original operating cashflow                                   2,84,925

Sensitivity of OCF                                                      45,500

7 0
2 years ago
Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the f
s344n2d4d5 [400]

Answer:

b. Stock Y has a higher dividend yield than Stock X

Explanation:

Hope it helped...Please mark brainliest. Have a nice day!

7 0
3 years ago
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