A virtual mold apparatus for producing dental crowns permits an infinite number of shapes to be custom constructed based upon mold imprints taken by dentists. It costs $28,500 and is purchased at the beginning of the tax year. It is expected to last 9 years with no salvage value at that time. The dental supplier depreciates assets using MACRS but values assets of the company using straight-line depreciation. Determine the depreciation allowance and the unrecovered investment for each year using each of the following:

A virtual mold apparatus for producing dental crowns permits an infinite number of shapes to be custom constructed based upon mold imprints taken by dentists. It costs $28,500 and is purchased at the beginning of the tax year. It is expected to last 9 years with no salvage value at that time. The dental supplier depreciates assets using MACRS but values assets of the company using straight-line depreciation. Determine the depreciation allowance and the unrecovered investment for each year using each of the following:

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 13E

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A virtual mold apparatus for producing dental crowns permits an infinite number of shapes to be custom constructed based upon mold imprints taken by dentists. It costs $28,500 and is purchased at the beginning of the tax year. It is expected to last 9 years with no salvage value at that time. The dental supplier depreciates assets using MACRS and yet values assets of the company using straight-line depreciation. Determine the depreciation allowance and the unrecovered investment for each year: a. For tax purposes (be sure to identify the MACRS-GDS property class). b. For company valuation purposes.
A virtual mold apparatus for producing dental crowns permits an infinite number of shapes to be custom constructed based upon mold imprints taken by dentists. It costs $28,500 and is purchased at the beginning of the tax year. It is expected to last 9 years with no salvage value at that time. The dental supplier depreciates assets using MACRS but values assets of the company using straight-line depreciation. Determine the depreciation allowance and the unrecovered investment for each year using each of the following: Click here to access the MACRS-GDS Property Classes Part a Part b Your answer is partially correct. For company valuation purposes. ΕΟΥ Depreciation Allowance Book Value
A high-precision programmable router for shaping furniture components is purchased by Henredon for $190,000. It is expected to last 12 years and have a salvage value of $5,000. Calculate the depreciation deduction and book value for each year. Use declining balance depreciation with a rate that ensures the book value equals the salvage value.
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Metal Recycling and Salvage receives the opportunity to salvage scrap metal and other materials from an old industrial site. The current owners of the site will sign over the site to Enviro at no cost. Enviro intends to extract scrap metal at the site for 24 months and then will clean up the site, return the land to useable condition, and sell it to a developer. Projected costs associated with the project follow: Read the requirements2. Requirement 1. Assuming that Enviro expects to salvage 70,000tons of metal from the site, what is the total project life cycle cost? Total Life-Cycle Costs Variable costs: Metal extraction and processing Fixed costs: Metal extraction and processing Rent on temporary buildings Administration Clean-up Land restoration Selling land Total life-cycle cost Requirement 2. Suppose Enviro can sell the metal for $110 per ton and wants to earn a…
Metallic Peripherals, Inc., has received a production contract for a new product. The contract lasts for 5 years. To do the necessary machiningoperations, the firm can use one of its own lathes, which was purchased 3years ago at a cost of $16,000. Today the lathe can be sold for $8,000. In 5years the lathe will have a zero salvage value. Annual operating andmaintenance costs for the lathe are $4,000/year. If the firm uses its own lathe, it must also purchase an additional lathe at a cost of $12,000; its value in 5 years will be $3,000. The new lathe will have annual operating and maintenance costs of $3,500/year. As an alternative, the presently owned lathe can be traded in for $10,000 and a new lathe of larger capacity purchased for a cost of $24,000; its value in 5 years is estimated to be $8,000, and its annual operating and maintenance costs will be $6,000/ year. Solve, a. Use the EUAC cash flow approach. b. Use the EUAC opportunity cost approach.An additional alternative is to…
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An assembly operation at a software company currently requires $100,000 per year in labor costs. A robot can be purchased and installed to automate this operation, and the robot will cost $200,000 with no MV at the end of its 10-year life. The robot, if acquired, will be depreciated using SL depreciation to a terminal BV of zero after 10 years. Maintenance and operation expenses of the robot are estimated to be $64,000 per year. Thecompany has an effective income tax rate of 40%. Invested capital must earn at least 8% after income taxes are taken into account. Solve, a. Use the IRR method to determine if the robot is a justifiable investment. b.If MACRS (seven-year recovery period) had been used in Part (a), would the after-tax IRR be lower or higher than your answer to Part (a)?
An auto-part manufacturing company is considering the purchase of an industrial robot to do spot welding, which is currently done by skilled labor. The initial cost of the robot is $250,000, and the annual labor savings are projected to be $125,000. If purchased, the robot will be depreciated under MACRS as a seven-year recovery property. This robot will be used for five years after which the firm expects to sell it for $50,000. The company's marginal tax rate is 35% over the project period.(a) Determine the net after-tax cash flows for each period over the project life.(b) Is this a good investment at MARR of 15%?