Present worth of lifetime depreciation charges for method

Assignment Help Financial Management
Reference no: EM131068319

Consider the depreciation of a $5,000 asset with $0 salvage value using both the Straight Line and SOYD depreciation methods. Assume a 5-year depreciable life. Develop the complete depreciation schedules for the asset showing year-by-year depreciation charges and book values. What is the total present worth of the lifetime depreciation charges for each method? Use an interest rate of 8% per year.

Please show work and formulas used.

Reference no: EM131068319

Questions Cloud

Compare with the current book value of the equipment : Four years ago, Warrior Auto Service purchased some new equipment at a cost of $75,000. The equipment has since been depreciated annually using the SOYD method, assuming a life of seven years and a salvage value of $5,000. How does this offer compare..
Straight line depreciation and SOYD depreciation : A large profitable corporation purchased a small jet plane for use by its executives. The plane cost $3,500,000. It has a depreciation life of seven years and $0 salvage value. determine the present worth of all the depreciation charges assuming an i..
Pricing strategy to reduce your operating exposures : How to tell if a company has operating exposures? Is the product price elastic? Why? How do you use the pricing strategy to reduce your operating exposures? Briefly Explain.
What is the price of the stock : Pharsalus Inc. just paid a dividend (i.e., D0) of $ 1.57 per share. This dividend is expected to grow at a rate of 2.9 percent per year forever. The appropriate discount rate for Pharsalus's stock is 13.9 percent. What is the price of the stock?
Present worth of lifetime depreciation charges for method : Consider the depreciation of a $5,000 asset with $0 salvage value using both the Straight Line and SOYD depreciation methods. Assume a 5-year depreciable life. Develop the complete depreciation schedules for the asset showing year-by-year depreciatio..
What is the aftertax salvage value of the equipment : Kolby’s Korndogs is looking at a new sausage system with an installed cost of $635,000. This cost will be depreciated straight-line to zero over the project’s five-year life, at the end of which the sausage system can be scrapped for $99,000. What is..
Dividend is expected to grow at rate : Pharsalus Inc. just paid a dividend (i.e., D0) of $ 1.57 per share. This dividend is expected to grow at a rate of 2.9 percent per year forever. The appropriate discount rate for Pharsalus's stock is 13.9 percent. What is the price of the stock?
Present value of the rent payments over life of the lease : Spinning Wheels Co. is considering renting a new bike shop. The landlord has offered a number of alternatives for paying the rent. Using a spreadsheet or financial calculator, calculate the present value of the rent payments over the life of the leas..
Determine the initial investment in the project : Anderson Technologies is considering expanding into a new product line. The new product line is estimated to produce new sales of 100,000 units at $2 per unit. The project requires the purchase of new equipment that will cost $240,000 including shipp..

Reviews

Write a Review

Financial Management Questions & Answers

  Explain how the euro may affect uk international trade

Explain how the euro may affect UK international trade. When South Korea's export growth stalled, some South Korean firms suggested that South Korea's primary export problem was the weakness in the Japanese yen.

  What is the break-even level of ebit for plan

Cooke Co. is comparing two different capital structures. Plan I would result in 9,000 shares of stock and $360,000 in debt. Plan II would result in 12,600 shares of stock and $216,000 in debt. The interest rate on the debt is 9 percent. compare both ..

  How do we calculate the payback period for a proposed

How do we calculate the payback period for a proposed capital budgeting project?  What are the main criticisms of the payback method?

  What was the rate of return on this investment

Calculating the Number of Periods. Calculating Rates of Return. In 2011, an 1880-O Morgan silver dollar sold for $13,113. What was the rate of return on this investment?

  Generate major difference between economic pension cost

Deferral of unrealized gains or losses may generate major difference between the economic pension cost and the:

  What is the minimum expected annual return for stock

In order to fund her retirement, Michele requires a portfolio with an expected return of 0.11 per year over the next 30 years. She has decided to invest in Stocks 1, 2, and 3, with 25 percent in Stock 1, 50 percent in Stock 2, and 25 percent in Stock..

  What are the incremental free cash flows in the second year

Cathy Foods will release new range of candies which contain antioxidants. New equipment to manufacture the candy will cost 2 million, which will be depreciated by straight line depreciation over four years. In addition, there will be 5 million spent ..

  The expected return less the required return

Firm H's shares sell today for $62 and are forecast to be priced at $77.50 and to pay a dividend of $1.80 at the end of one year. Firm H's beta is 0.80, the market risk premium is 5.5%, and the riskless return is 2%. The expected return less the requ..

  Should barry complain about his treatment

Should Barry complain about his treatment? To whom? If he did complain, what power tactics should Barry use? Studies have shown that those prone to complaining tend to have less power in an organization. Do you think complaining leads to diminished ..

  Discounted revenues minus discounted cash flows

alue of discounted revenues minus discounted costs: $200 Million. A study that looked at the viability of the project has already been completed at a cost of 3M. What is the NPV of the project? Now you have to consider not only the discounted revenue..

  Which type of security would it need to sell to accomplish

Suppose that Lil John Industries equity is currently selling for $42 per share and that 3.5 million shares are outstanding. The firm also has 65,000 bonds outstanding, which are selling at 103% of par. Assume Lil John was considering an active change..

  The after tax salvage and the return of working capital

The Cambell Company is considering adding a robotic paint sprayer to its production line. The sprayer's base price is $1,080,000, and it would cost another $22,500 to install it. What is the Year 0 net cash flow? What is the additional Year 3 cash fl..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd