Capital committed to the equipment during its lifetime

Assignment Help Financial Accounting

Reference no: EM131268036

A firm requires power shovels for its open-pit mining operation. This mining equipment, with a first cost of $500,000, has an estimated salvage value of $70,000 at the end of 10 years' service. If the firm uses a rate of interest of 15% for the project evaluation, how much must be earned on an equivalent annual basis so that the firm recovers its invested capital plus earns a return on the capital committed to the equipment during its lifetime?

Reference no: EM131268036

Questions Cloud

Tax depreciation and the tax gain on the equipment sale : Neither Form 4562 for depreciation nor Form 4797 for the sale of the equipment is required. Include the amount of tax depreciation and the tax gain on the equipment sale given in the problem (or determined from information given in the problem) on th..

Estimates taxes were paid by the larges : George Large worked as a salesman for Toyboat, Inc. He received a salary of $80,000 ($8,500 of federal income taxes withheld and $1,800 of state income taxes withheld) plus an expense reimbursement from Toyboat of %5,000 to cover his employee busines..

Stock option plan for key executives : On October 15, 2012, the board of directors of Ensor Materials Corporation approved a stock option plan for key executives. On January 1, 2013, 18 million stock options were granted, exercisable for 18 million shares of Ensor's $1 par common stock. W..

Capital committed to the equipment during its lifetime : A firm requires power shovels for its open-pit mining operation. This mining equipment, with a first cost of $500,000, has an estimated salvage value of $70,000 at the end of 10 years' service. If the firm uses a rate of interest of 15% for the proje..

Prepares a multiple-step income statement : In 2017, Matt Cruz Company had net sales of $977,700 and cost of goods sold of $571,900. Operating expenses were $223,900, and interest expense was $13,300. Cruz prepares a multiple-step income statement.

Construction of a small lake by building an earth dam : A county park is considering the construction of a small lake by building an earth dam on Stick Rock Creek. The cost of the dam construction would be $1, 150,000, and other improvements would cost $220,000. If it is assumed that the dam life is perpe..

Define the term earnings quality : The financial community in the United States has become increasingly concerned with the quality of reported company earnings. Define the term earnings quality. Explain the distinction between permanent and transitory earnings as it relates to the con..

What is your current inventory turnover ratio : Financial Results for Birmingham Wire and Cable Supply Company Year end 12/31/15 Income Statement Partial Balance Sheet Net Sales $10,000,000 Cash $109,375 Cost of Goods Sold $7,250,000 Accounts Receivable $1,232,877 Gross Margin $2,750,000. What is ..

User Account

All Pages