Free Preparation Discussions
MENU
IMANET Exam CMA Topic 5 Question 90 Discussion
Topic #: 5
Calamity Cauliflower Corporation is considering undertaking a capital project, The company would have to commit $24,000 of working capital in addition to an immediate outlay of $160,000 for new equipment. The project ts expected to generate $100,000 of annual income for 10 years. At the end of that time, the new equipment, which will be depreciated on a straight-line basis, is expected to have a salvage value of $10,000. The existing equipment that would be sold to make room for the project has a histoncal cost of $220,000 and accumulated depreciation of $208,000. It has an estimated remaining useful life of 2 years and the remaining book value is being depreciated on a straight-line basis. A scrap dealer has agreed to buy it for $8,000. The company's effective tax rate is 40%. Calamity Cauliflowers expected additional depreciation tax shield for the first year of the project is?
If the 8% return exactly equals the present value of the future flows ., NPV is zero), then simply determine the present value of the future inflows. Thus, Hopkins Company's initial cash outlay is $19,090 [($2,500)(PVIFA at 8% for 10 periods) + ($5J00)(PVlF at 8% for 10 periods ($2,500)(6.710) + ($5,000)(.463)].
Brigette
1 months agoTony
11 days agoHillary
16 days agoEulah
1 months agoEmerson
1 months agoTemeka
4 days agoCandida
5 days agoLaquanda
19 days agoMable
2 months agoLai
2 months agoTesha
1 months agoLai
2 months agoJesusita
2 months agoSantos
2 months agoCarma
18 days agoTammara
24 days agoLeah
1 months agoRosalind
2 months agoCarisa
2 months ago