Exercise 24-4 (Algo) Payback period, unequal cash flows, and depreciation adjustment LO P1A machine can be purchased for $130,000 and used for five years, yielding the following income. This income computation includesannual depreciation expense of $26,000.IncomeYear 1$8,800Year 2$21,800Year 3$57,000Year 4$32,900Year 5$87,200Compute the machine's payback period. (Round payback period answer to 2 decimal places.)× Answer is complete but not entirely correct.YearNetIncomeDepreciationNet CashFlowCumulative NetCash FlowInitial invest$(130,000)$(130,000)Year 1$8,800$26,00034,80034,800 xYear 221,80026,00047,80082,600 ×Year 357,00026,00083,000130,000 ☑Year 432,90026,000Year 587,20026,000Payback period =2.57 years

Step 1: The calculation of the payback ABCDE1YearIncomeDepreciationCashflowCumulative CF20 $…

Answered: Exercise 24-4 (Algo) Payback period,…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter5A: Depreciation Methods

Section: Chapter Questions

Problem 4SEB: MODIFIED ACCELERATED COST RECOVERY SYSTEM Using the information given in Exercise 5Apx-1B and the...

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Project Year MACRS Depreciation Rate Year 0 Year 1 33.33% 44.45% Year 2 14.81% Year 3 7.41% A machine is purchased for $850,000 and is used through the end of Year 2. The machine will be depreciated using the 3-Year MACRS schedule in the table above. At the end of Year 2, the machine is sold for $75,000. What is the after-tax cash flow from the sale of the machine at the end of Year 2 if the firm's marginal tax rate is 35%? O $57,962 $70,795 O $79,608 O $55,998 O $62,985 O $75,000
MACRS Year 0 Depreciation Rate 33.33% $55,998 $79,608 $57,962 A machine is purchased for $850,000 and is used through the end of Year 2. The machine will be depreciated using the 3-Year MACRS schedule in the table above. At the end of Year 2, the machine is sold for $75,000. What is the after-tax cash flow from the sale of the machine at the end of Year 2 if the firm's marginal tax rate is 35%? $62,985 $75,000 Project Year Year 1 44.45% $70,795 Year 2 14.81% Year 3 7.41%
Exercise 24-2 (Algo) Payback period, equal cash flows, and depreciation adjustment LO P1 Quary Company is considering an investment in machinery with the following information. Initial investment Useful life Salvage value Expected sales per year Required A Required B (a) Compute the investment's annual income and annual net cash flow. (b) Compute the investment's payback period. $ 380,000 Complete this question by entering your answers in the tabs below. Annual Amounts 9 years $ 20,000 19,000 units Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Selling price per unit Compute the investment's annual income and annual net cash flow. Income Net cash flow Required A $ Income 0 $ Cash Flow Required B > 0 $ 85,500 40,000 9,500 $ 10
No written by hand solution An asset with a first cost of $14,000 is depreciated using the Modified Accelerated Cost recovery System (MACRS) over a 5-year period. The cash flow before taxes (CFBT) is estimated at $10,000 for the first 4 years and $5000 thereafter as long as the asset is retained. The effective tax rate is 40%, and the money is worth 8% per year. In present worth dollars, how much of the cash flow generated by the asset over its recovery period is lost to taxes? The present worth (PW) of CFBT is determined to be $ . The present worth (PW) of CFAT is determined to be $ . The difference between the two present worth (PW) values is determined to be $ .
Question text A machine was purchased for $125,000. It is expected to have a life of 6 years. What is the carrying amount of the machine after 3 years using the diminishing balance for tax depreciation method? Select one a. $41,667 b. $62,500 C. $37,043 d. $83,333
ems i Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Gross investment Less: Accumulated depreciation Net investment Year 0 Year 1 Year 2 Year 3 Year 4 $ 65,000 $ 65,000 $65.000 $ 65,000 $65,000 0 16,250 32,500 48,750 65,000 AAR $ 65,000 $48.750 $ 32.500 $ 16,250 $ 0 The machine generates, on average. $4.900 per year in additional net income. What is the average accounting return for this machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.) Saved
Rework Example 7-21 using the MACRS depreciation method (assume three-year property class) instead of the SL depreciation method 7-21. A new municipal refuse collection vehicle can be purchased for $84,000. Its expected useful life is 6 years, at which time the market value and book value will be zero. Before-tax cash flow (BTCF) will be +$18,000 per year over the 6-year life of the vehicle. (7.9) a. Use straight-line depreciation, an effective income tax rate of 40% and an after-tax MARR of 12% to determine the present worth of the investment. b. What is the after-tax internal rate of return? c. Is this vehicle a sound investment? Explain your answer.
Given the two machines' data Machine A Machine B First Cost P8,000.00 P14,000.00 Salvage value Annual operation 2,000.00 3,000.00 2,400.00 Annual maintenance 1,200.00 1,000.00 Taxes and insurance 3% 3% Life, years 10 15 Money is worth at least 16% Using equivalent uniform annual cost method, determine the value of alternative A and alternative B: ANSWER for ALTERNATIVE A: Blank 1 ANSWER for ALTERNATIVE B: Blank 2
Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below) Project Y requires a $316,500 investment for new machinery with a six-year life and no salvage value. The project yields the following annual results Cash flows occur evenly within each year of $1. EV of $1 PVA of end EVA of Use appropriate factor(s) from the tables provided.) Sales of now product Екрепко Depreciation Machinery Project Problem 24-2A (Algo) Part 3 3. Compute Project Y's accounting rete of retum $137,35 Age of
Exercise 10-24 On December 31, 2020, Vaughn Inc. has a machine with a book value of $1,353,600. The original cost and related accumulated depreciation at this date are as follows. Machine $1,872,000 Less: Accumulated depreciation 518,400 Book value $1,353,600 Depreciation is computed at $86,400 per year on a straight-line basis.Presented below is a set of independent situations. For each independent situation, indicate the journal entry to be made to record the transaction. Make sure that depreciation entries are made to update the book value of the machine prior to its disposal. Your answer is partially correct. Try again. A fire completely destroys the machine on August 31, 2021. An insurance settlement of $619,200 was received for this casualty. Assume the settlement was received immediately. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If…
Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $301,500 investment for new machinery with a four-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Problem 24-2A (Algo) Part 4 Years 1-4 4. Determine Project Y's net present value using 9% as the discount rate. (Do not round intermediate calculations. Round your present value factor to 4 decimals and final answers to the nearest whole dollar.) Initial investment Net present value Net Cash Flows X Present…
Question: A company XYZ has purchased a new CNC Machine which has a cost basis of $5,000 and 8-year depreciable life. The estimated salvage value of the machine is zero at the end of 8 years. Use the Declining Balance method to calculate the annual depreciation amounts when R = 1.5/N (150% DB method). Tabulate the annual depreciation amount and Book Value for each year. (Solve question handwritten on white page clean and neat)

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