ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 51P
To determine
To decide whether Machine A should be retained or replaced by Machine B by computing after tax annual cost.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The Dauten Toy Corporation uses an injection molding machine that was purchased prior to the new tax legislation. This machine is being depreciated on a
straight-line basis, and it has 6 years of remaining life. Its current book value is $2,100, and it can be sold for $2,600 at this time. Thus, the annual
depreciation expense is $2,100/6 = $350 per year. If the old machine is not replaced, it can be sold for $500 at the end of its useful life.
Dauten is offered a replacement machine which has a cost of $9,000, an estimated useful life of 6 years, and an estimated salvage value of $800. The
replacement machine is eligible for 100% bonus depreciation at the time of purchase. The replacement machine would permit an output expansion, so sales
would rise by $800 per year; even so, the new machine's much greater efficiency would cause operating expenses to decline by $1,000 per year. The new
machine would require that inventories be increased by $2,500, but accounts payable would…
The Dauten Toy Corporation currently uses an injection molding machine that was purchased prior to the new tax legislation. This machine is being depreciated on a straight-line basis, and it has 6 years of remaining life. Its current book value is $2,400, and it can be sold for $2,600 at this time. Thus, the annual depreciation expense is $2,400/6 = $400 per year. If the old machine is not replaced, it can be sold for $500 at the end of its useful life.
Dauten is offered a replacement machine which has a cost of $8,000, an estimated useful life of 6 years, and an estimated salvage value of $800. The replacement machine is eligible for 100% bonus depreciation at the time of purchase. The replacement machine would permit an output expansion, so sales would rise by $800 per year; even so, the new machine's much greater efficiency would cause operating expenses to decline by $1,000 per year. The new machine would require that inventories be increased by $2,500, but accounts payable would…
A set of Wire Bond machine costs $500,000. This amount includes freight and installation charges estimated at 10% of the original price. If the machine shall be depreciated over a period of 10 years with a salvage value of $5,000, what is the annual depreciation charge and the book value at the end of 7 years?
Chapter 13 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 13 - Prob. 1QTCCh. 13 - Prob. 2QTCCh. 13 - Prob. 3QTCCh. 13 - Prob. 4QTCCh. 13 - Prob. 5QTCCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - Prob. 3PCh. 13 - Prob. 4PCh. 13 - Prob. 5P
Ch. 13 - Prob. 6PCh. 13 - Prob. 7PCh. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prob. 10PCh. 13 - Prob. 11PCh. 13 - Prob. 12PCh. 13 - Prob. 13PCh. 13 - Prob. 14PCh. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Prob. 19PCh. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 24PCh. 13 - Prob. 25PCh. 13 - Prob. 26PCh. 13 - Prob. 27PCh. 13 - Prob. 28PCh. 13 - Prob. 29PCh. 13 - Prob. 30PCh. 13 - Prob. 31PCh. 13 - Prob. 32PCh. 13 - Prob. 33PCh. 13 - Prob. 34PCh. 13 - Prob. 35PCh. 13 - Prob. 36PCh. 13 - Prob. 37PCh. 13 - Prob. 38PCh. 13 - Prob. 39PCh. 13 - Prob. 40PCh. 13 - Prob. 41PCh. 13 - Prob. 42PCh. 13 - Prob. 43PCh. 13 - Prob. 44PCh. 13 - Prob. 45PCh. 13 - Prob. 46PCh. 13 - Prob. 47PCh. 13 - Prob. 48PCh. 13 - Prob. 49PCh. 13 - Prob. 50PCh. 13 - Prob. 51PCh. 13 - Prob. 52PCh. 13 - Prob. 53PCh. 13 - Prob. 54PCh. 13 - Prob. 55PCh. 13 - Prob. 56P
Knowledge Booster
Similar questions
- A surface mount PCB placement/soldering line is to be installed for $1,800,000. It will have a salvage value of $90,000 after 5 year Determine the depreciation deduction and the resulting unrecovered investment during each year of the asset's life. Click here to access the MACRS-GDS Table Calculator Part a Determine the depreciation deduction and the resulting unrecovered investment during each year of the asset's life using straight-line depreciation. ΕΟΥ 0 1 Depreciation 0 1458000 2 1116000 3 4 5 Sum depreciation Balances 1800000 342000 68arrow_forwardA $150,000 asset has been depreciated with the straight-line method over an 8-year life. The estimated salvage value was $30,000. At the end of the fifth year, the asset was sold for $90,000. From a tax perspective, what is happening at the time of disposal and what is the dollar amount?arrow_forwardA numerically controlled milling machine was purchased for $95,000. The estimated salvage value was $15,000 after 15 years. What is the machine’s book value after 5 years of depreciation? If the machine is sold for $20,000 early in Year 7, how much gain on sale or recaptured depreciation is there? Assume(a) Straight-line depreciation(b) 150% declining balance depreciation(c) 80% bonus depreciation with the balance using 7-year MACRS depreciation(d) 7-year MACRS depreciationarrow_forward
- AN EQUIPMENT WAS PURCHASED FOR P500,000.00. END OF LIFE COST AFTER 25 YEARS IS P100,000.00. FIND THE CUMULATIVE DEPRECIATION FOR THE FIRST 3 YEARS USING STRAIGHT LINE METHOD.arrow_forwardAn SMP machine costs $500,000 and has a $50,000 salvage value after 10 years of use. Using straight-line depreciation, what are the depreciation charge and book value for the machine after year 5?arrow_forwardA man bought a machine for $ 535705 six years ago. It has a salvage value of $ 36957 four years from now. He sold it now for $ 46847. What is the sunk cost or the value of the machine that the man lost if the depreciation method used is a Sum of the Years' Digit method?arrow_forward
- You're evaluating a new electron microscope for the QA (quality assurance) unit. The microscope will cost $22,000 to buy and another $2,000 to install, and will be sold for $1,800 after 3 years. It falls into the 3-year MACRS class, with depreciation rates as follows: Year 1 2 3 4 Depreciation rate 33% 45% 15% 7% The microscope will require an inventory of spare parts worth $5,000. The equipment will not increase revenue, but will save the company $13,000 in labor costs each year. Your company's marginal tax rate (federal plus state) is 34% and the appropriate cost of capital for this project is 16%. What is the initial (year-0) incremental cash flow? Choose the right sign. What is the incremental cash flow in year 1? What is the incremental cash flow in year 2? What is the net salvage value at the end of year 3? What is the incremental cash flow in year 3? What is the NPV of this project?arrow_forwardAn equipment cost 10,000 with a salvage value of 500 at the end of 10 years. Calculate the annual depreciation by straight line method. Select the correct response: 900 1000 950 850arrow_forwardAn equipment costs $4433082 with the estimated salvage value of $542566 at the end of 10 years. What is the annual depreciation cost by sinking fund method at 3.8% interest? Round your answer to 2 decimal places. Add your answerarrow_forward
- A machine was purchased at an original cost of P400,000 with a salvage value of P20,000. Life of this machine is expected to last for 6 years. It was used 4000 hours in the first year, 6000 hours in the second year, and 8000 hours on the third year. The machine is expected to last for 38,000 hours in a period of 6 years. Which of the following gives the depreciation at the end of the second year?arrow_forwardA machine purchased for P315374 has a depreciable life of 7 years, and it has a terminal book (salvage) value of $12974 at the end of its depreciable life. With the straight-line method of depreciation, what is the asset's book value at the end of year Round your answer to 2 decimal places.arrow_forwardAn asset purchased for $50,000 has a depreciable life of 5 years, and it has a terminal book (salvage) value of $5,000 at the end of its depreciable life. With the straight-line method of depreciation, what is the asset’s book value at the end of year 3?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education