### Replacing the asset by using nvp methodology

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##### Reference no: EM139749

The Taylor Corporation is using a machine that originally cost \$66,000. The machine has a book value of \$66,000 and a current market value of \$40,000. The asset is in the Class 5 CCA pool which allows 35% depreciation per year. It will have no salvage value after 5 years and the company tax rate is 40 percent. Jacqueline Elliott, the Chief Financial Officer of Taylor, is considering replacing this machine with a newer model costing \$70,000. The new machine will cut operating costs by \$10,000 each year for the next five years. Taylor's cost of capital is 8 percent. Should the firm replace the asset? (Use NPV methodology to solve this problem)

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 Determine the firm''s operating income : Which of the following will cause income determined with absorption costing to be higher than income determined with direct costing - An excess of cost of goods manufactured over cost of goods sold for the period represents Computation of unit cost using activity-based costing : Computation of unit cost using activity-based costing and Determine the unit cost for each of the two products using activity-based costing Proper accounting treatment of machine : Discuss the proper accounting treatment of \$273,000 (\$714,000 − \$441,000) by which the cost of the first machine exceeded the cost of subsequent machines. Aging and the elderly : Describe how different societies and technological factors affect how aging is viewed. Replacing the asset by using nvp methodology : The new machine will cut operating costs by \$10,000 each year for the next five years. Taylor's cost of capital is 8 percent. Should the firm replace the asset? (Use NPV methodology to solve this problem) Find comparative income statements for the company : Find comparative income statements for the company similar to Exhibit 6.8 for the three different inventory costing methods of FIFO, LIFO, and weighted average. Claims makers-activis : Claims makers who are activists typically should: Cash basis income statement : Mostert Music Company had the following transaction in March - Cash basis Income Statement and Accrual basis Income Statement Character of income-partnership interest : How much income must Dave report for the tax year and what is the character of the income? What is Dave's basis in his partnership interest at the end of the tax year?

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