PROBLEM 14B
GIVEN: NEW MACHINE COST
DEPR LIFE YEARS (S/L)
ANNUAL SAVINGS
SALES PRICE OLD MACHINE
NBV OLD MACHINE
DEPR YEARS REMAINING
OVERHAUL
YEAR OF OVERHAUL
TAX RATE
DISCOUNT RATE 650,000
8
120,000
15,000
9,000
3
28,000
5
30%
6% REQUIRED
CALCULATE NPV
COST
COST
SALES PRICE OLD MACHINE
NBV
GAIN/LOSS
TAX
COST ANNUITY
ANNUAL SAVINGS
DEPR
TAXABLE INCOME
TAX
ANNUITY PRESENT VALUE
DEPR OFFSET
OVERHAUL
COST TAX 15,000
9,000
6,000
1,800 TAX
120,000
81,250
38,750
11,625 ANNUITY
FACTOR
108,375
6.20979
900
2.67301
19,600
0.74726 NET PRESENT VALUE CASH
650,000
15,000 (OFFSET TO PURCHASE PRICE) 1,800
636,800 CASH
120,000 11,625
108,375 672,986
2,406
14,646
636,800 LOST DEPR DEDUCTION 19,134 REQUIRED
CALCULATE NPV AT 8% PRESENT VALUE
DEPR OFFSET
OVERHAUL
COST
NET PRESENT VALUE ANNUITY
FACTOR
108,375
5.74664
900
2.57710
19,600
0.68058 622,792
2,319
13,339
636,800
(29,667) LOST DEPR DEDUCTION
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Answers
Status NEW
Posted 20 Jun 2017 06:06 AM
My Price 20.00
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