New Semester
Started
Get
50% OFF
Study Help!
--h --m --s
Claim Now
Question Answers
Textbooks
Find textbooks, questions and answers
Oops, something went wrong!
Change your search query and then try again
S
Books
FREE
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Tutors
Online Tutors
Find a Tutor
Hire a Tutor
Become a Tutor
AI Tutor
AI Study Planner
NEW
Sell Books
Search
Search
Sign In
Register
study help
business
fundamentals engineering economics
Fundamentals Of Engineering Economic Analysis 2nd Edition White, John A., Grasman, Kellie S., Case, Kenneth E., LaScola Needy, Kim, Pratt, David B. - Solutions
09.05-PR002 A subsidiary of AEP places in service electric generating and transmission equipment at a cost of $3,000,000. It is expected to last 30 years with a salvage value of$250,000. The equipment will increase net income by $500,000 in the first year, increasing by 2.4% each year thereafter.
Raytronics wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1.4 million and will have a salvage value of $200,000 after 8 years. Its use will create an
Michelin is considering going “lights out” in the mixing area of the business that operates 24/7. Currently, personnel with a loaded cost of $600,000 per year are used to manually weigh real rubber, synthetic rubber, carbon black, oils, and other components prior to manual insertion in a
Griffin Dewatering is considering three alternatives. The first is the purchase of a permanent steel building to house their existing equipment for the overhaul of dewatering systems (engines, pumps, and well points). The building can be put into service for $240,000 in early January of this year.
Recall Problem 09.02-PR023. Suppose both options will involve a loan of 40% of the investment cost, with payment over (a) 6 years and (b) 8 years using Plan 1 and a sweet Federal government loan rate of 2%. Rework the problem.
Recall Problem 09.02-PR022. Suppose both alternatives will involve a loan of 40% of the investment cost, with payment over 10 years using Plan 4 and a sweet Federal government loan rate of 2%. Rework the problem.
Recall Problem 09.02-PR021. Suppose both conveyors will require a loan of $14,000 at an interest rate of 10%, with payment using Plan 2 over a period of 3 years.Rework the problem.
Recall Problem 09.02-PR020. Suppose both investments will require a loan of $14,000 at an interest rate of 10%, with payment using Plan 4 over a period of 3 years.Rework the problem.
09.03-PR018 Recall Problem 09.02-PR019. Suppose both alternatives will require a loan of 50% of the investment cost, an annual interest rate of 18%, with payment using Plan 3 over the 6-year planning horizon. Rework the problem.
09.03-PR017 Recall Problem 09.02-PR018. Suppose both models will require a loan of$40,000 at an interest rate of 17%, with payment using Plan 1 over a period of 4 years.Rework the problem.
A project has a first cost of $180,000, an estimated salvage value of$20,000 after 6 years, and other economic attributes as detailed in the table below.Unfortunately, as the end of year 4 neared, the project had to be abandoned and the market value of the asset at that time was different from the
An asset is purchased for $90,000 with the intention of keeping it for 10 years, but is sold at the end of year 3. A total of $30,000 was borrowed money that was to be repaid over three years in equal annual payments, including principal and interest. The depreciation is correct for the appropriate
Chevron Phillips has put into place new laboratory equipment for the production of chemicals; the first cost is $1,800,000 installed. Chevron Phillips borrows 45% of all capital needed and the borrowing rate is 1.5% over 4 years. The throughput rate for in-process test samples has increased the
09.03-PR013 A subsidiary of AEP places in service electric generating and transmission line equipment at a cost of $3,000,000 with half of it borrowed at 11% over 8 years. It is expected to last 30 years with a salvage value of $250,000. The equipment will increasenet income by $500,000 in the
Video Solution Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1.4 million,$600,000 of which is borrowed at 11% for 5 years, and will have a salvage
09.03-PR011 A Boeing contractor responsible for producing a portion of the landing gear for huge airliners experienced a storm-related power glitch during the multi-axis milling, to tolerances less than 0.001 inch, of a large and complex part. The value already in the part, plus the equipment
Abbott placed into service a flexible manufacturing cell costing $850,000 early this year. They financed $425,000 of it at 11% per year over 5 years. Gross income due to the cell is expected to be $750,000 with deductible expenses of $475,000. Depreciation is based on MACRS-GDS and the cell is in
09.03-PR009 Hyundai USA has numerous robotic welders as well as robotic checkers with vision. One underbody robotic welder costing $1,200,000 (7-year property class) was installed and is increasing productivity by 2.5% in one area. The result is a savings of$500,000 per year. Deductible expenses
09.03-PR008 Specialized production equipment is purchased for $125,000. The equipment qualifies as 5-year equipment for MACRS-GDS depreciation. Suppose 40% of the investment capital is borrowed at an annual compound rate of 18% and the loan is repaid over a 4-year period.The BTCF profile for the
09.03-PR007 A company purchases a machine for $800,000. The equipment qualifies as 5-year property for MACRS-GDS depreciation. The machine is paid for by borrowing$500,000, to be repaid over a 5-year period at an annual compound interest rate of 12%.Before-tax cash flows are as shown on the next
09.03-PR006 An investment of $250,000 is made in equipment that qualifies as MACRSGDS 7-year property. The before-tax cash flow profile for the investment is given below, including a $100,000 salvage value at the end of the 5-year planning horizon. A loan is taken for 80% of the investment capital
09.03-PR005 A Boeing contractor responsible for producing a portion of the landing gear for huge airliners experienced a storm-related power glitch during the multi-axis milling, to tolerances less than 0.001 inch, of a large and complex part. The value already in the part, plus the equipment
Abbott placed into service a flexible manufacturing cell costing $850,000 early this year for production of their analytical testing equipment.Gross income due to the cell is expected to be $750,000 with deductible expenses of$475,000. Depreciation is based on MACRS-GDS and the cell is in the
09.03-PR003 Hyundai USA has numerous robotic welders as well as robotic checkers with vision. One underbody robotic welder was installed and is increasing productivity by 2.5% in one area. The result is a savings of $500,000 per year. Deductible expenses other than depreciation and interest
Video Solution Chevron Phillips has put into place new laboratory equipment for the production of chemicals; the cost is $1,800,000 installed. CP borrows 45% of all capital needed and the borrowing rate is 12.5%. In the first year, 25%of the principal borrowed will be paid back. The throughput rate
09.03-PR001 What is the difference or distinction being made when we speak of beforetax cash flows and before-tax and loan cash flows. Be precise in your answer.
09.02-PR023 Two mutually exclusive alternatives, A and B (both MACRS-GDS 5-year property), are available. Alternative A requires an original investment of $100,000, has a useful life of 6 years, annual operating costs of $2,500, and a salvage value at the end of year k given by $100,000(0.70)k .
09.02-PR022 A firm may invest $30,000 in a numerically controlled lathe for use in furniture manufacturing (MACRS-GDS 7-year property). It would last for 11 years and have zero salvage value at that time. Alternatively, the firm could invest $X in a methods improvement study (this is non
A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $70,000 with $3,000 salvage value after 16 years. The other can be purchased andinstalled for $110,000 with $4,000 salvage value after 16
09.02-PR020 Two investments involving a granary qualify for different property classes.Investment A costs $70,000 with $3,000 salvage value after 16 years and is depreciated as MACRS-GDS in the 10-year property class. Investment B costs $110,000 with a $4,000 salvage value after 16 years and is in
Video Solution A portable concrete test instrument used in construction for evaluating and profiling concrete surfaces (MACRS-GDS 5-year property class) is under consideration by a construction firm for $22,000. The instrument will be used for 6 years and be worth $2,000 at that time. The annual
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.Two models are available. One costs $58,500 and is expected to last 9 years with no salvage value at that time. Costs of use are $30 per
Two investments involving a virtual mold apparatus for producing dental crowns qualify for different property classes. Investment A has a cost of$58,500, lasts 9 years with no salvage value, and costs $150,000 per year in operating expenses. It is in the 3-year property class. Investment B has a
In Problem 09.02-PR015, suppose the equipment still qualifies as MACRSGDS 3-year property but is sold for $300,000 after 3 years of use. A 25% tax rate applies and the after-tax MARR is 8%. Determine the ATCF for each year and the after-tax PW,AW, IRR, and ERR.
An investment of $800,000 is made in equipment that qualifies as 3-year equipment for MACRS-GDS depreciation. The BTCF profile for the investment is given below, including a $200,000 salvage value at the end of the 5-year planning horizon. A 25% tax rate applies and the after-tax MARR is 8%.
A company purchases a machine for $800,000. The equipment qualifies as 5-year property for MACRS-GDS depreciation. Before-tax cash flows are as shown below, including a $200,000 salvage value after 5 years. Using a 25% income-tax rate, determine the ATCF for each year and the after-tax PW, AW, IRR,
09.02-PR013 Specialized production equipment is purchased for $125,000. The equipment qualifies as 5-year equipment for MACRS-GDS depreciation. The BTCF profile for the acquisition, shown below, includes a $30,000 salvage value at the end of the 5-year planning horizon. A 25% tax rate applies.
09.02-PR012 AgriGrow can invest in a “100-day” short-term project costing $90,000 to improve customer service. They believe the return on the project will be a net increase in sales of $37,000 per year over 3 years and $43,000 in the 4th year. AgriGrow’s income-tax rate is 25% and MARR is 10%
09.02-PR011 A tractor for over-the-road hauling is to be purchased by AgriGrow for$90,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $4,000. Transportation cost savings are expected to be $170,000 per year;however, the cost of drivers is expected to
09.02-PR010 Henredon can spend $190,000 now for a design portfolio with a different furniture look inspired by some of the ultra-modern culture in the metropolitan areas of Dubai. While some consider this a gamble, it is generally conceded that such a new line can result in increased net revenues
09.02-PR009 Video Solution 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. It will produce $45,000 in net revenue each year during its life. Corporate income-tax rate is
09.02-PR008 Bell’s Amusements purchased an expensive ride for their theme and amusement park situated within a city-owned Expo Center. Bell’s had a multiyear contract with Expo Center. The ride cost $1.35 million, installed. Gross income from the ride was$420,000 per year, with operating
09.02-PR007 A subsidiary of AEP places in service electric generating and transmission equipment at a cost of $3,000,000. It is expected to last 30 years with a salvage value of$250,000. The equipment will increase net income by $500,000 in the first year, increasing by 2.4% each year thereafter.
09.02-PR006 Suppose Milliken has an opportunity with similar cash flows to those for a digitally controlled “dyer,” although there are no depreciable items. They can invest in a marketing study by a blue-ribbon consultancy costing $400,000. Expected net returns are$95,000 per year over 7 years
Milliken uses a digitally controlled “dyer” for placing intricate and integrated patterns on manufactured carpet squares for home and commercial use. It is purchased for $400,000. It is expected to last 8 years and have a salvage value of $30,000.Increased net income due to this dyer is $95,000
09.02-PR004 Raytheon wishes to use an automated environmental chamber in the manufacture of electronic components. The chamber is to be used for rigorous reliability testing and burn-in. It is installed for $1.4 million and will have a salvage value of$200,000 after 8 years. Its use will create an
09.02-PR003 A specially coated mold for manufacturing tires (MACRS-GDS 3-year property) costs $35,000 and has a salvage value of $1,750 after a useful life of 5 years.The mold generates a net savings of $14,000 per year. The corporate tax rate is 25%. Find the after-tax cash flow for each year
09.02-PR002 A special handling device for the manufacture of food is placed in service.It costs $30,000 and has a salvage value of $2,000 after a useful life of 5 years. The device generates a savings of $14,000 per year. Corporate income-tax rate is 25%. Find the after-tax cash flow for each year
09.02-PR001 An air purifier for use in manufacturing semiconductors is placed in service with a first cost of $50,000. It will be used for 8 years, have an annual gross income less operating expenses of $14,000 and will have no salvage value. Corporate income-tax rate is 25%.a. Determine the
Video Solution Calculate the corporate income tax for each of the following corporate taxable incomes.a. $12,000b. $65,000c. $220,000d. $1,000,000e. $19,300,000
Calculate the corporate income tax for each of the following corporate taxable incomes.a. $15,000b. $88,000c. $180,000d. $400,000e. $16,700,000
09.01-PR006 What is the federal income tax for each of the following corporate taxable incomes?a. $25,000b. $70,000c. $95,000d. $200,000e. $1,000,000f. $12,000,000 g. $17,000,000 h. $25,000,000
09.01-PR005 Explain why it is generally preferred to do economic analyses on an aftertax basis, rather than on a before-tax basis.
09.01-PR004 Explain the primary effect of (a) the 2008 Economic Stimulus Act, (b) the 2010 Tax Relief Act, and (c) the American Tax Cuts and Jobs Act of 2018.
09.01-PR003 For each statement in parts a tod, give a short answer or indicate True or False.a. Which of the following is a cash flow: (1) depreciation, (2) loan interest paid, and/or(3) income tax.b. We know that depreciation law has changed dramatically since 1950; however, tax law has not
09.01-PR002 Income taxes are calculated based on gross income less certain allowable deductions. They are also assessed on gains resulting from the disposal of property. What is a 10-word or less definition appropriate for a corporation, based on Wikipedia, for each of the following factors?a.
09.01-PR001 What are the various taxes paid in the USA by corporations? Which of those has the most significant impact upon economic analyses?
09-FE016 A company has purchased $2,200,000 in Section 179-qualifying property during the year. In addition to using the Section 179 expense deduction, it wishes to use 50% bonus depreciation. Being in the offshore oil and gas business, all such assets are MACRS 5-year property. What will be the
A small company has purchased Section 179-qualifying assets for$750,000 during the year. How much money will be saved in taxes during year 1 if the following data apply:Depreciation in year 1 if Section 179 is NOT used = $187,500 Loan repayment = $70,000 Interest payment on loan = $20,000a.
A company has total asset purchases of $2,800,000 during the year. It has borrowed $1,400,000 toward these purchases at a rate of 5.25%. What is the amount it can expense using the Section 179 expense deduction?a. $800,000b. $300,000c. $700,000d. $0
A MACRS 7-year oil field exploration property is depreciated using 50 bonus depreciation. This will reduce the taxes due by $21,430 in year 1 compared to not using any bonus depreciation at all. Which of the following is closest to the initial investment being depreciated?a. $126,960b. $188,943c.
09-FE012 The following data are from an after-tax cash flow analysis in year 1 for a new MACRS 5-year property. How much money would be saved in year 1 if 100% bonus depreciation is used?Initial Investment = $180,000 Regular MACRS Depreciation Deduction in Year 1 = $36,000 Before-Tax-and-Loan Cash
09-FE011 The following data are from an after-tax cash flow analysis in year 1 for a new MACRS 5-year property. How much money would be saved in year 1 if 50% bonus depreciation is used?Initial Investment = $180,000 Regular MACRS Depreciation Deduction in Year 1 = $36,000 Before-Tax-and-Loan Cash
Consider the following data for 2019 from an after tax cash flow analysis.What is the after tax cash flow for 2019?Before-Tax-and-Loan = $23,000 Loan Principal Payment = $3,203 Loan Interest Payment = $3,878 Depreciation Deduction = $12,490 Taxable Income = $6,633 Taxes Due = $1,658a. $20,744b.
Consider the following data for 2021 from an after tax cash flow analysis.What is the taxable income for 2021?Before-Tax-and-Loan = $23,000 Loan Principal Payment = $3,203 Loan Interest Payment = $3,877 Depreciation Deduction = $12,490 Taxes Due = $1,658 After-Tax Cash Flow = $14,262a. $40,000b.
Consider the following data for 2020 from an after-tax cash flow analysis.What is the loan interest payment for 2020?Before-Tax-and-Loan = $20,000 Loan Principal Payment = $4,018 Depreciation Deduction = $8,920 Taxable Income = $8,018 Taxes Due = $2,004.50 After-Tax Cash Flow = $10,915.50a.
Consider the following data extracted from an after-tax cash flow calculation.Before-Tax-and-Loan = $22,500 Loan Principal Payment = $5,926 Loan Interest Payment = $2,400 MACRS Depreciation Deduction = $16,665 Which of the following is closest to the Taxable Income?a. −$2,491b. −$91c. $3,435d.
Consider the following data extracted from an after-tax cash flow calculation.Before-Tax-and-Loan = $22,500 Loan Principal Payment = $7,434 Loan Interest Payment = $892 MACRS Deduction = $7,405 Taxes Due = $3,550.75 Which of the following is closest to the after-tax cash flow?a. $1,372b. $8,777c.
When considering the use of debt capital to finance a project, the upper limit for the interest rate on an attractive loan can be determined by which of the following?a. MARR b. MARR*(1 + tax rate)c. MARR/(1 − tax rate)d. MARR*(1 − tax rate)
When a business calculates taxable income from gross income, which of the following is true?a. Depreciation, interest, and principal are all subtractedb. Depreciation and interest are subtracted, principal is notc. Depreciation is subtracted, interest and principal are notd. Interest and principal
The correctly calculated taxes due on a corporate taxable income of$13,000,000 are closest to which of the following?a. $2,730,000b. $3,250,000c. $3,750,000d. $4,200,000
A professional engineer who teaches at a university also does consulting as time permits. Her efforts do not conflict with her professorial job and she does this work through her own (one-person) company. Gross income for the year is $207,000;depreciation of equipment is $23,000; expenses such as
A company has depreciation of $250,000 for the year. Interest is $75,000 on an outstanding loan of $1,000,000. Employee pay, outside services, repairs, utilities, transportation, legal fees, and similar expenses are $2,150,000. Taxable income is$225,000. What is the gross income for the year?a.
Concept Check 08.04-CC001 With 100% bonus depreciation, the entire investment is recovered in the first year. True or False?What are the depreciation allowances and book values for the SMP machine using MACRS depreciation with 50% and 100% bonus depreciation?
MACRS-ADS is based on which of the following depreciation methods?a. Declining balance depreciationb. Straight-line depreciationc. Double declining balance depreciationd. Declining balance depreciation with optimal switch to straight-line depreciation
Of the following, what information is required to calculate depreciation allowances under MACRSGDS?I. Useful life II. First cost III. Salvage value IV. Property classa. II and IV onlyb. II, III, and IV onlyc. I, II, and IV onlyd. I, II, III, and IV
What are the depreciation allowances and book values for the SMP machine using MACRS-GDS depreciation if the machine is sold in the 4th year?
What are the depreciation allowances and book values for the SMP machine using MACRS depreciation?
The optimal switch from declining balance depreciation to straight-line depreciation occurs when what condition is met?a. The first time the depreciation deduction from straight-line depreciation is greater than the salvage value of the assetb. The first time the depreciation deduction from
Which of the following statements is true when comparing double declining balance depreciation to straight-line depreciation?a. Double declining balance deductions will be greater than straight-line deductions in all years of the asset’s depreciable lifeb. Double declining balance deductions will
Of the following, what information is required to calculate depreciation allowances under straight-line depreciation?I. Useful life II. First cost III. Salvage value IV. Property classa. I and II onlyb. II and IV onlyc. I, II, and III onlyd. I, II, III, and IV
Which of the following items would not be depreciable in computing income taxes?a. A company’s corporate headquarter buildingb. Land on which a company’s factory sitsc. A machine tool used for productiond. A company’s office furniture
Which of the following statements about depreciation is not true?a. Depreciation helps companies estimate the cost of doing businessb. U.S. tax law permits deductions from taxable income for depreciationc. Depreciable property may be tangible or intangibled. Depreciation is a cash flow that is
A virtual mold apparatus for producing dental crowns permits an infinite number of shapes to be custom constructed based upon moldimprints 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
Bell’s Amusements purchased an expensive ride for their theme and amusement park situated within a city-owned Expo Center. Bell’s had a multi-year contract with Expo Center. The ride cost $1.2 million. Bell’s anticipated that the ride would have a useful life of 12 years, after which the net
Electric utility transmission and distribution equipment(MACRS-GDS 20-year property) is placed in service at a cost of $300,000. It is expected to last 30 years with a salvage value of $15,000. Determine the depreciation deduction and the book value during each year of the first 4 tax years using
Repeat the previous problem (Problem 08.04-PR004) if the material-handling equipment is removed just after the tax year, again using MACRS-GDS allowances.a. Use 50% bonus depreciation.b. Use 100% bonus depreciation.
Material-handling equipment used in the manufacture of grain products (MACRS-GDS 10-year property) is purchased and installed for$180,000. It is placed in service in the middle of the tax year. If it is removed just before the end of the tax year approximately 4.5 years from the dateplaced in
A digitally controlled plane for manufacturing furniture(MACRS-GDS 7-year property) is purchased on April 1 by a calendar-year taxpayer for $66,000. It is expected to last 12 years and have a salvage value of $5,000. Calculate the depreciation deduction during years 1, 4, and 8 using MACRS-GDS
A panel truck (MACRS-GDS 5-year property) is purchased for$17,000. The truck is expected to be of use to the company for 6 years, after which it will be sold for $2,500. Calculate the depreciation deduction and the book value during each year of the asset’s life using MACRS-GDS allowances.a. Use
A mold for manufacturing medical supplies (MACRS-GDS 5-year property) is purchased at the beginning of the fiscal year for $30,000. The estimated salvage value after 10 years is $3,000. Calculate the depreciation deduction and the book value during each year of the asset’s life using MACRS-GDS
Ultra-clean special handling devices used in the filling process for the manufacture of baby food are placed into use at a cost of $850,000.These devices are expected to be useful for 4 years with a negligible salvage value at that time. Compare MACRS to traditional depreciation methods by
A building with business offices, a reception area, and numerous small diagnosis rooms is placed in service by a group of three orthopedic surgeons on January 4 for $650,000.a. What is the MACRS-GDS property class?b. Calculate the depreciation deduction for years 1, 4, and 7 if it is kept longer
Video Solution Equipment for manufacturing vegetable oil products is purchased from Alfa. Items such as oil expellers, filter presses, and a steam generator are purchased for $1.2 million. These devices are expected to be used for 11 years with no salvage value at that time.Compare MACRS to
A residential rental apartment complex is placed in service by a calendar-year taxpayer on February 27 for $530,000. The apartments are kept for slightly more than 6 years and sold on March 6.a. What is the MACRS-GDS property class?b. Determine the depreciation deduction during each of the 7 years
A permanent steel building used for the overhaul of dewatering systems (engines, pumps, and wellpoints) is placed in service on July 10 by a calendar-year taxpayer for $240,000. It is sold almost 5 years later on May 15.a. What is the MACRS-GDS property class?b. Determine the depreciation deduction
Now that you are making the big bucks, your spouse has decided to venture into the rental property business. Your spouse purchases a rental house and after making some improvements it has a basis of $85,000.Your spouse places it in service as a calendar-year taxpayer during May and sells it in
A nonresidential business building is placed in service by a calendar year taxpayer on March 3 for $300,000.a. What is the MACRS-GDS property class?b. Calculate the depreciation deduction for years 1, 4, and 8 if it is kept longer than 8 years.c. Calculate the depreciation deduction for years 1, 4,
08.03-PR034 Suppose the IRS has decided to institute a new MACRS-GDS property class of 4 years. It will follow the usual depreciation conventions, determined in the same way as 3-, 5-, 7-, and 10-year property. Determine the yearly MACRS-GDS percentages for each year.
08.03-PR033 Suppose the IRS has decided to institute a new MACRSGDS property class of only 2 years. It will follow the usual depreciation conventions, determined in the same way as 3-, 5-, 7-, and 10-year property.Determine the yearly MACRS-GDS percentages for each year.
Showing 300 - 400
of 4481
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Last
Step by Step Answers
Get 50% OFF
Claim Now
