HomeworkLib
Question

Briston Company is considering a 3-year project with an initial cost of $586,000. The project will...

Briston Company is considering a 3-year project with an initial cost of $586,000. The project will not directly produce any sales but will reduce operating costs by $158,000 a year. The equipment is classified as MACRS 7-year property. The MACRS table values are .1429, .2449, .1749, .1249, .0893, .0892, .0893, and .0446 for Years 1 to 8, respectively. At the end of the project, the equipment will be sold for an estimated $284,000 before tax. The tax rate is 25 percent and the required return is 12 percent. An extra $63,000 of inventory will be required for the life of the project. What is the total cash flow for Year 3?

$534,670.80

$452,380.60

$516,278.20

$435,672.40

$484,187.30
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
Briston Company is considering a 3-year project with an initial cost of $586,000. The project will...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 4. Lefty's just purchased some equipment that is classified as 7-year property for MACRS. The equipment...

    4. Lefty's just purchased some equipment that is classified as 7-year property for MACRS. The equipment cost $67,600. The MACRS table values are .1429, .2449, .1749, .1249, and .0893, for Years 1 to 5, respectively. What will the book value of this equipment be at the end of four years? $7,040.00 $15,081.56 $21,118.24 $8,443.24 $6,036.68

  • You are considering a 3-year project with an initial cost of $620,000. The project will not...

    You are considering a 3-year project with an initial cost of $620,000. The project will not directly produce any sales but will reduce operating costs by $265,000 a year. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $63,000 (before tax). The tax rate is 34%. The project will require $23,000 in extra inventory for spare parts and accessories...

  • Scenario 2: A metal fabrication company bought a new CNC machine for $600,000 in year 2014....

    Scenario 2: A metal fabrication company bought a new CNC machine for $600,000 in year 2014. The machine has a 20-year MACRS life and will be depreciated using accelerated depreciation. Sales revenue for year 2014 was $862,000. Annual operating expenses for each year are $434,000, excluding capital expenditures and depreciation. (Note: Use the 2016 corporate tax rate schedule/table). 2A. What is the value of depreciation recorded in the accounting books/cash flow statement for year 2014? 2B. What is the net...

  • A company is considering a 6-year project that requires an initial outlay of $26,000. The project...

    A company is considering a 6-year project that requires an initial outlay of $26,000. The project engineer has estimated that the operating cash flows will be $4,000 in year 1, $7,000 in year 2, $7,000 in year 3, $7,000 in year 4, $7,000 in year 5, and $9,000 in year 6. At the end of the project, the equipment will be fully depreciated, classified as 5-year property under MACRS. The project engineer believes the equipment can be sold for $6,000...

  • The Peabody Company has 7 year MACRS property with an original cost basis of $1,700,000. Calculate...

    The Peabody Company has 7 year MACRS property with an original cost basis of $1,700,000. Calculate the ending book value at Year 4. Year MACRS Depreciation 1 14.29% .1429 * $1,700,000 = $ 242,930 2 24.49 .2449 x 1,700,000 - 416,330 3 17.49 . 1749 x 1,700,000 - 297,330 4 12.49 ? Ending book value $1,457,070 $1,040, 740 743,410 ? Multiple Choice $955,740 $743,410 $531,080

  • show work 18. Thornley Machines is considering a 3-year project with an initial cost of $400,000....

    show work 18. Thornley Machines is considering a 3-year project with an initial cost of $400,000. The project will not directly produce any sales but will reduce operating costs by $175,000 a year before taxes. The equipment is depreciated straight-line to a zero book value over the life of the project. At the end of the project the equipment will be sold for an estimated $100,000. The tax rate is 35 percent. The project will require $60,000 in extra inventory...

  • A company is considering an 8-year project to expand into a new geographical area. The project...

    A company is considering an 8-year project to expand into a new geographical area. The project requires a new machine, which would cost $180,000 FOB San Francisco, with a shipping cost of $4,000 to the new plant location. Installation expenses of $11,000 would also be required. This new machine would be classified as 7-year property for MACRS depreciation purposes. The project engineers anticipate that this equipment could be sold for salvage for $55,000 at the end of the project. If...

  • A company is considering a 5-year project to expand production with the purchase of a new...

    A company is considering a 5-year project to expand production with the purchase of a new automated machine using the latest technology. The new machine would cost $160,000 FOB St. Louis, with a shipping cost of $7,000 to the plant location. Installation expenses of $15,000 would also be required. This new machine would be classified as 7-year property for MACRS depreciation purposes. The project engineers anticipate that this equipment could be sold for salvage for $43,000 at the end of...

  • A company is considering a 5-year project to expand production with the purchase of a new...

    A company is considering a 5-year project to expand production with the purchase of a new automated machine using the latest technology. The new machine would cost $220,000 FOB St. Louis, with a shipping cost of $8,000 to the plant location. Installation expenses of $14,000 would also be required. This new machine would be classified as 7-year property for MACRS depreciation purposes. The project engineers anticipate that this equipment could be sold for salvage for $38,000 at the end of...

  • Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $195,000 and...

    Delia Landscaping is considering a new 4-year project. The necessary fixed assets will cost $195,000 and be depreciated on a 3-year MACRS and have no salvage value. The MACRS percentages each year are 33.33 percent, 44.45 percent, 14.81 percent, and 7.41 percent, respectively. The project will have annual sales of $132,000, variable costs of $35,500, and fixed costs of $12,850. The project will also require net working capital of $3,450 that will be returned at the end of the project....

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT