Daily Enterprises is purchasing a $10.5million machine. It will cost $46,000 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value. The machine will generate incremental revenues of $4.3 million per year along with incremental costs of $1.5 million per year. If​ Daily's marginal tax rate is 21%​, what are the incremental earnings​ (net income) associated with the new​ machine? The annual incremental earnings are $_____________________ ​(Round to the nearest​ dollar.)

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Calculation of equivalent annual savings: Answer: Equivalent annual savings is $14,777.60…

Q: A $73,000 machine with a 10-year class life was purchased 6 years ago. The machine will now be sold…

A: Book value of old machine = cost - depreciation

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $24…

A: Given: Cost of equipment = $24 million Depreciated = 100% Tax rate = 30% Sale value = $7 million

Q: Jacobs is considering the purchase of a new machine for $10,700 that has a life of 6 years and would…

A: Present Value- The value of an investment or an amount today is referred to as its present value. It…

Q: Allen Air Lines must liquidate some equipment that is being replaced. The equipment originally cost…

A: Equipment's after tax net salvage value = salvage value - tax on capital gain tax on capital gain =…

Q: The used equipment can be sold today for $4.6 million, and its tax rate is 25%. What is the…

A: After Tax Salvage Value: It is computed by reducing the tax on profit on the sale of equipment from…

Q: Your company is interested in investing in a new die casting machine. The machine costs $120,000 and…

A: Capital Budgeting Techniques: The techniques that are used to assess prospective investment…

Q: Bau Long-Haul, Inc., is considering the purchase of a tractor-trailer that would cost $363,510,…

A: The internal rate of return is the annual growth rate that an investment project is expected to…

Q: What is the equivalent annual saving from the purchase if Gluon can depreciate 100% of the…

A: Given information is: Gluon Inc. is considering the purchase of a new high pressure glueball. It can…

Q: What is the equivalent annual saving from the purchase

A: Equivalent annual savings is the cost of operating and maintaining an asset annually. It is also…

Q: Bau Long-Haul, Inc., is considering the purchase of a tractor-trailer that would cost $432,605,…

A: IRR is a rate at which the present value of cash inflows is equal to the present value of cash…

Q: What are the Equivalent annual savings?

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Precision Ltd is considering an equipment that costs $176,000, and is depreciated on a straight-line…

A: Depreciation refers to the measure which allocates the cost of an asset over some specified useful…

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Calculation of equivalent annual savings: Answer: Equivalent annual savings is $4,080.11

Q: Your firm needs a computerized machine tool lathe which costs $50,000 and requires $12,000 in…

A: Salvage value is the important component that help us to calculate  Annual depreciation. So, after…

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $24…

A: Book value of asset = 0 million (100% depreciated)  Equipment sold at = 10 million Tax rate = 20%

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $21…

A: Equipment originally cost =21,000,000 Depreciation (100%*21,000,000)  =21,000,000 Book value…

Q: Laurel's Lawn Care, Ltd., has a new mower line that can generate revenues of $135,000 per year.…

A: Given:

Q: Builders Supply, Inc.is considering adding a new product line that is expected to increase annual…

A: Project fixed assets cost = $165,000 Life of assets = 8 Years Tax rate = 34%

Q: St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a…

A: Replacing machinery may be a huge capital expense for the firm or enterprise therefore a lot of…

Q: ACDC Company is considering the installation of a new machine that costs $150,000. The machine is…

A: The internal rate of return is the rate of return a project generates in its lifetime expressed in a…

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Initial investment of the company is the sum of the cost of high pressure glueball plus after tax…

Q: what is the after tax salvage value?

A: Information Provided: Initial costs = $190,000 Maintenance costs = $34,000 Life = 3 years…

Q: fter tax annual cost

A: Cash flow represents the money in and out of the company. It refers to the financial statement that…

Q: A $85,000 machine with a 9-year class life was purchased 3 years ago. The machine will now be sold…

A: The initial outlay for the project can be calculated by deducting the selling value of the old…

Q: St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a…

A: MPV is the difference between present value of all cash inflows and initial investment NPV =PV of…

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $31…

A: In the given question we need to calculate the after tax salvage value.

Q: The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will…

A: a) Calculate the present value of Machine A and B as shown below Resultant table Hence, the…

Q: A road construction company is considering the purchase of a gravel hauler as it prepares for a new…

A: The question is related to Internal Rate of Return (IRR) . IRR is the rate which equates the Present…

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $33…

A: Original cost of equipment = $33 million Total depreciation on equipment =$33 millions * 75% =…

Q: Shunt Technology will spend $800,000 on a piece of equipment that will  manufacture fine wire for…

A: Net investment is the total of all expenses which are incurred to operate or run the project. it…

Q: Win Corporation is considering the purchase of a P100,000 machine that i expected to result in a…

A: Accounting rate of return: The accounting rate of return is the percentage of return of a particular…

Q: The Lumber Yard is considering adding a new product line that is expected to increase annual sales…

A: Depreciation Tax shield = Tax rate x Depreciation Expense Depreciation Expense = Cost - Salvage…

Q: Gluon Inc. is considering the purchase of a new high pressure glueball. It can purchase the glueball…

A: Equivalent annual savings is the annual savings made by operating and maintaining the assets over…

Q: Laurel’s Lawn Care Ltd., has a new mower line that can generate revenues of $171,000 per year.…

A: Formulas:

Q: HaulCo is considering the purchase of a truck. Over its five year life, it will provide revenues of…

A: The answer is stated below:

Q: Karsted Air Services is now in the final year of a project. The equipment originally cost $23…

A: Since equipment has been 100% depreciated;Book value as on date of sale = 0 Hence gain on sale =…

Q: Tasty Bakery Co. is considering a new product line. In order to manufacture the new product, the…

A: If the present value of cash flows is more than the amount of current investment, then the project…

Q: Your firm needs a machine which costs $210,000, and requires $36,000 in maintenance for each year of…

A: Computation of tax shield on depreciation: Depreciation=Cost of asset×Depreciation rate for year…

Q: Laurel’s Lawn Care Ltd., has a new mower line that can generate revenues of $135,000 per year.…

A: Given revenues =135,000 per year Direct production costs =$45,000 fixed costs =$17,500 a year…

Q: llana Industries, Inc., needs a new lathe. It can buy a new high-speed lathe for $0.97 million. The…

A: NPV is method for determining the current value of the cash flows, which have been generated by the…

Q: Bau Long-Haul, Incorporated, is considering the purchase of a tractor-trailer that would cost…

A: The internal rate of Return is the rate at which the present value of future cash is fully recovered…

Q: Your firm needs a computerized machine tool lathe that costs $50,000 and requires $12,000 in…

A: Working note:

Q: A corporation is considering a proposal for the purchase of a machine that will save $130,000 per…

A: Capital budgeting techniques are the methods that are used to evaluate various alternatives of…

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.