estimates that a $750 PC will be worth approximately $150 in 24 months‚ for a before-tax salvage value of hardware of $1‚131‚300. Considering the loss on book value‚ this provides an after-tax salvage value of $1‚669‚799. Software has no salvage value regardless of the year‚ so AMG will have a total loss equal to the book value. This in turn provides AMG with a tax benefit of $923‚141. The after-tax salvage value of the hardware and software will therefore be $2‚054‚441. After
Premium Depreciation
car for generations of Indians.” Hindustan is now considering producing the car in China. This will involve an initial investment of RMB 4 billion.14 The plant will start production after one year. It is expected to last for five years and have a salvage value at the end of this period of RMB 500 million in real terms. The plant will produce 100‚000 cars a year. The firm anticipates that in the first year it will be able to sell each car for RMB 65‚000‚ and thereafter the price is expected to increase
Premium Depreciation Net present value Investment
$75‚000 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10‚000. Payback period =Cost of investment/ Annual net cash flow =$260‚000/ $125‚000 =2.08 years Annual depreciation = $260‚000 -$10‚000 / 5 = $50‚000 Annual after tax income $75‚000 + Depreciation 50‚000 Annual net cash flow $125‚000 2. A machine costs $190‚000‚ has a $10‚000 salvage value‚ is expected to last nine years‚ and will generate an after-tax income of $30
Premium Net present value Investment Internal rate of return
Problem | | | | | | | | | | | | | | | | | Data: | | | | | | | | Initial investment | $80‚000 | | | | | | | Increase in working capital | $20‚000 | | | | | | | Length of investment | 6 | | | | | | | Salvage value | $8‚000 | | | | | | | Before tax annual cash inflows | $28‚500 | | | | | | | Tax rate | 35% | | | | | | | Discount rate | 14% | | | | | | | | | | | | | | | | 1. Annual accounting income | | | |
Premium Net present value Internal rate of return
Palms Hospital (Traditional Project Analysis) Palms Hospital * 250 bed capacity; investor owned; Islamorada‚ Florida * Founded in 1946 by Rob Winslow‚ went back in 1967 after the war * High economic growth‚ population expansion * Acknowledged to be one of the leading healthcare providers in the area * Currently evaluating a proposed ambulatory (outpatient) surgery centre * More than 80% o all outpatient surgery is performed by specialists * Minor procedures take about
Premium Depreciation Surgery Anesthesia
it would cost an additional $30‚000 to install the equipment. The machinery has an economic life of 4 years‚ and Shrieves has obtained a special tax ruling which places the equipment in the MACRS 3-year class. The machinery is expected to have a salvage value of $25‚000 after 4 years of use. The new line would generate incremental sales of 1‚250 units per year for four years at an incremental cost of $100 per unit in the first year‚ excluding depreciation. Each unit can be sold for $200 in the first
Premium Depreciation Cash flow
MODULE 9 CAPITAL BUDGETING THEORIES: Basic Concepts Decision Making Process 2. The first step in the decision-making process is to A. determine and evaluate possible courses of action. B. identify the problem and assign responsibility. C. make a decision. D. review results of the decision. Strategic planning 39. Strategic planning is the process of deciding on an organization’ A. minor programs and the approximate resources to be devoted to them B. major programs
Premium Net present value
Part e. Estimate the required net working capital for each year and the cash flow due to investments in net working capital. The firm needs to increase its net working capital by 12% of incremental sales revenues. This amount is needed in the year before the sales revenue is earned. The amount for year 0 is 12% x $250‚000 = $30‚000.00‚ and that for year 1‚ 2‚ and 3 are $30‚900.00‚ $31‚827.00‚ and $32‚781.81 respectively. The cash flow due to the changes in the working capital is shown in Table 2
Premium Net present value Investment Risk
Assessment: Lite orange juice Project 1. Define the term “incremental cash flow”. Since the project will be financed in part by debt‚ should the cash flow analysis include the interest expense? Incremental cash flow is the additional operating cash flow that an organization receives from taking on a new project. A positive incremental cash flow means that the company ’s cash flow will increase with the acceptance of the project. Cash flow analysis should not include the interest expense. We
Premium Net present value Cash flow Generally Accepted Accounting Principles
1.Offer 1. Offer means a proposal by a person in which he makes his willingness to enter into a legally binding contract for some conside¬ration. 2. An offer is made with the object of getting consent of the offeree. 3. An offer can be accepted by the offeree. 4. An offer when accepted becomes an agreement. Invitation to Offer 1. An Invitation to offer means an intention of a person to invite others with a view to enter into an agreement. 2. An invitation to offer on the other hand is made
Premium Contract