Determine the project net present value

Assignment Help Accounting Basics
Reference no: EM132794413

Question - NPV: Taxes and Accelerated Depreciation - Assume that United Technologies Corporation is evaluating a proposal to change the company's manual design system to a computer-aided design (CAD) system. The proposed system is expected to save 12,000 design hours per year; an operating cost savings of $65 per hour. The annual cash expenditures of operating the CAD system are estimated to be $600,000. The CAD system requires an initial investment of $200,000. The estimated life of this system is five years with no salvage value. The tax rate is 21%, and United Technologies uses straight-line depreciation for tax purposes. United Technologies has a cost of capital of 14%.

Assume that management intends to use double-declining balance depreciation with a switch to straight-line depreciation (applied to any undepreciated balance) starting in Year 4. Determine the project's net present value.

Reference no: EM132794413

Questions Cloud

What are some of the concerns by the native americans : What are some of the concerns by the Native Americans over archaeology? How does some of the US legislation protect the Native Americans' rights on their land?
Determining the cash flows of a specific project : Under what conditions the WACC can be used as a discount rate for the cash flows of a specific project?
What is the value of the equity in the firm : What is the value of the equity in this firm? Fiscal Unity Inc.'s assets are currently worth $50,800. These assets are expected to be worth $44,000
Discuss about the family support profession : Indicate how the family support profession has successfully or unsuccessfully dealt with the necessity of providing services in a culturally inappropriate.
Determine the project net present value : The tax rate is 21%, and United Technologies uses straight-line depreciation for tax purposes. Determine the project net present value
Find what is the adjusted gross income : Find what is their (a) adjusted gross income; (b) their total itemized deductions; (c) the amount of their exemptions; and (d) their taxable income.
What is the optimal number of swap contracts : What is the optimal number of swap contracts into which the bank should enter?
Relationship between bond prices and interest rates : In need help with these questions why is there a market for bonds? Why do some financial analysts treat preferred stock as a special type of bond rather than eq
What is the impact of the stereotypes : Consult In Whose Honor? Provide an analysis of the arguments for and against these mascots. What do these positionings reflect in relation to the legacy.

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is the expect cash to be collected in may

The Accounts Receivable balance on May 1 was $53,000. What is the expect cash to be collected in May

  Journalize the entries to record the February transactions

On October 6, Muir issued 20,000 shares of 1%, $50 preferred stock at par for cash. Journalize the entries to record the February transactions

  On the last day of the year xyz corporation made a

on the last day of the year xyz corporation made a nonliquidating distribution to jane its sole shareholder of 110000

  Prepare contribution format income statement showing the net

Prepare contribution format income statement showing the net operating income each year from production and sale of Joey's Favorite Bread.

  Compute the amount that oriole will realize from the sale

On January 2, 2020, Oriole Company wishes to issue $6300000. Compute the amount that Oriole will realize from the sale (issuance) of the bonds.

  Carlo toll bridge corporation ltdan infrastructure company

carlo toll bridge corporation ltd.an infrastructure company has outstanding 5 million 8 debentures of 100 each issued

  In may we produced 48 tables the 48 tables used 950 linear

1. we produce wood tables. the standard costs are as follows per tablewood - 20.5 linear feet at a cost of 13.15

  What is the bond price today

The Company issued a 20-year bond five years ago with a face value of $1,000. What is the bond's price today if the coupon rate on comparable new issues is 14%

  How confident are you in recommending an action

Comprehensively apply and explain the Altman Z Score model to Evans and Tate in 2005. How confident are you in recommending an action based on this analysis?

  Compare the tax consequences to the shareholder

Compare the tax consequences to the shareholder and the distribution corporation of the following three kinds of corporate distribution: ordinary dividends

  A company has outstanding 100 mill par value bonds that pay

a company has outstanding 100 mill par value bonds that pay an annual coupon of interest of 10.5 . par value of each

  Compute the composite depreciation rate

Dickinson Inc. owns the following assets. Compute the composite depreciation rate and the composite life of Dickinson's assets

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