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AveGali [126]
3 years ago
9

ABC will purchase a machine that will cost $2,575,000. Required modifications will cost $375,000. ABC will need to invest $75,00

0 for additional inventory. The machine has an IRS approved useful life of 7 years; it is presumed to have no salvage value. ABC plans to depreciate the machine by using the straight-line method. The machine is expected to increase ABC's sales revenues by $1,890,000 per year; operating costs excluding depreciation are estimated at $454,600 per year. Assume that the firm's tax rate is 40%. What is the annual operating cash flow?
Business
1 answer:
3241004551 [841]3 years ago
6 0

Answer:

The Annual Operating Cash Flow is $1,029,811.43

Explanation:

Initial Investment = Cost of Machine + Modification Cost

Initial Investment = $2,575,000 + $375,000

Initial Investment = $2,950,000

Salvage Value = $0

Useful Life = 7 years

Depreciation per year = (Initial Investment - Salvage Value) / Useful Life

Depreciation per year = ($2,950,000 - $0) / 7

Depreciation per year = $421,428.57

Annual Operating Cash Flow = (Sales – Operating Costs) * (1 – Tax Rate) + Tax Rate * Depreciation

Annual Operating Cash Flow = ($1,890,000 - $454,600) * (1 - 0.40) + 0.40 * $421,428.571

Annual Operating Cash Flow = $1,435,400 * 0.60 + 0.40 * $421,428.571

Annual Operating Cash Flow = $1,029,811.4284

Annual Operating Cash Flow = $1,029,811.43

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Shawn Bixby borrowed $39,000 on a 150-day, 9% note. After 80 days, Shawn paid $4,200 on the note. On day 113, Shawn paid an addi
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Answer:

1,073.54 total interest

Explanation:

39,000 x 9% x 80days/360 = 780 interest expense

Payment 4,200 - 780 = 3,420 deducted form the note:

39,000 - 3,420 = 35,580

35,580 x 9% x 33/360 = 293.54 interest expense

6,200 - 293.54 = 5,906.47 deduced form the note

35,580 - 5,906.47 = 29,673,53

293.54 interest expense

780 interest expense

1,073.54 total interest

4 0
3 years ago
1. An agency is given detailed authority to issue rules similar to the power of statutes with _____ rule making.
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5 0
2 years ago
Use the following information:Net sales $ 240,000Cost of goods sold 172,000Beginning inventory 53,000Ending inventory 43,000Calc
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Answer:

The inventory turnover ratio is 3.58 times

Explanation:

Inventory turnover ratio an efficiency ratio that indicates how many times a company sells and replaces its stock of goods during a particular period

Inventory turnover ratio is calculated by using following formula:

Inventory turnover ratio = Cost of Goods Sold/Average Inventory

In there:

Average Inventory = (Beginning inventory + Ending inventory)/2

In the company:

Average Inventory = ($53,000 + $43,000)/2 = $48,000

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5 0
3 years ago
A business must decide whether to open a new office in China. If it opens the
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D a is the correct answer I’m pretty sure
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3 years ago
Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: Group of answer choices the inc
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Answer:

the benefit to his grades from studying for an hour

Explanation:

Opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.

Simply stated, it is the cost of not enjoying the benefits, profits or value associated with the alternative forgone or best alternative choice available.

In this scenario, Gomer decided to spend an hour playing basketball rather than studying his books. Thus, his opportunity cost is the benefit to his grades from studying for an hour.

This ultimately implies that, if he had spend the time he used in playing basketball to study, it would have added value to his grades.

6 0
3 years ago
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