The baltic company is considering the purchase of a new

Assignment Help Accounting Basics
Reference no: EM13597328

The baltic company is considering the purchase of a new machine tool to replace an obsolete one. the machine being used for the operation has a tax book value of $80,000 with an annual depreciation expense of 8,000. It has a salvage value of 40,000, is in good working condition, and will last at least 10 more years. the proposed machine will perform the operation so much more efficiently that baltic engineers estimate that labor, material, and other direct costs of the operation will be reduced 60,000 a year if it is installed. the proposed machine costs 240,000 delivered and installed, and it's economic life is estimated at 10 years, with zero salvage value. the company expects to earn 14% on it's investment after taxes(14% is the firm's cost of capital). the tax rate is 40% and the firm uses straighline depreciation. Any gain or loss on the machine is subject to tax at 40 percent. Should baltic buy the new machine?

Reference no: EM13597328

Questions Cloud

Computing shares outstanding the 2008 annual report for : computing shares outstanding the 2008 annual report for fortune brands the seller of pinnacle golf balls and masterlock
Two products if and ri emerge from a joint process product : two products if and ri emerge from a joint process. product if has been allocated 13300 of the total joint costs of
Determine the total sales kalifo company must have in 2010 : kalifo company manufactures a line of electric garden tools that are sold in general hardware stores. the company
Zickman co makes and sells a single product the current : zickman co. makes and sells a single product. the current selling price is 45 per unit. variable costs are 27 per unit
The baltic company is considering the purchase of a new : the baltic company is considering the purchase of a new machine tool to replace an obsolete one. the machine being
Calculate the decrease in company profits if troy engines : troy engines ltd. manufactures a variety of engines for use in heavy equipment. the company has always produced all of
The book value of little statistics total assets is 400000 : the book value of little statistics total assets is 400000. suppose number crunching inc. acquires little statistics
Computing the number of unissued shares the balance sheet : computing the number of unissued shares the balance sheet for crutcher corporation reported 247000 shares outstanding
Calculate the interest expense that coley co will show with : coley co. issued 30 million face amount of 9 10 year bonds on june 1 2010. the bonds pay interest on an annual basis on

Reviews

Write a Review

Accounting Basics Questions & Answers

  What elements might organizational leaders consider when

bullwhat are the acceptable inventory valuation methods under the u.s. generally accepted accounting principles

  Assume that the oregon ice cream company is considering the

assume that the oregon ice cream company is considering the costs of two of their product lines - ice cream sandwiches

  The fair market value

Tyneka inherited 1,000 shares of Aqua, Inc. stock from Joe. Joe's basis was $35,000, and the fair market value on July 1, 2012 (the date of death) was $45,000. The shares were distributed to Tyneka on July 15, 2012. Tyneka sold the stock on Ju..

  Three factor dupont analysis for starbucks

Conduct a three factor DuPont analysis for Starbucks and Dunkin' Donuts for 2011 and 2012 end-of-year results. Use the information from financial statements in the 2012 annual reports.

  Applied factory overhead for the period

At the end of the period, the factory overhead control account for Department A had a debit balance of $260,000; actual direct labor hours were 63,000. What was the under- or over applied factory overhead for the period

  Investigate the extent of auditor involvement in accounting

words at least 9000 ltbrgtintroduction ltbrgtgenerally when the accounting fraud was revealed finger would be pointed

  Rockland corporation earned net income of 321000 in 2012

rockland corporation earned net income of 321000 in 2012 and had 100000 shares of common stock outstanding throughout

  What are asset gains and losses and liability gains and

what are asset gains and losses and liability gains and losses and how are they documented for post employment benefits

  Problem related to calendar year tax-payer

On January 1, Gull Corporation (a calendar year taxpayer) has accumulated E & P of $200,000. During the year, Gull incurs a net loss of $280,000 from operations that accrues ratably. On June 30, Gull distributes $120,000 to Sharon, its sole shareh..

  No ache company has a division that produces a single

no ache company has a division that produces a single product - a backache reducing pill - that sells for 1. the pill

  How does opportunity cost enter into the make decision

How does opportunity cost enter into the make or buy decision? What would be an example of a decision that you might make in your personal life that would involve an opportunity cost? What decision would you make and how would you change the oppor..

  Cost drivers and value-added processes

What is activity-based costing? What are some of the key elements of activity-based costing? How does this method differ from a more traditional costing method? Do you prefer ABC over traditional costing methods?

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