What would the depreciation expense be each year

Assignment Help Financial Accounting
Reference no: EM132912873

Problem - Wendy's boss wants to use straight-line depreciation for the new expansion project because he said it will give higher net income in earlier years and give him a larger bonus. The project will last 4 years and requires $1,610,000 of equipment. The company could use either straight-line or the 3-year MACRS accelerated method. Under straight-line depreciation, the cost of the equipment would be depreciated evenly over its 4-year life. (Ignore the half-year convention for the straight-line method.) The applicable MACRS depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. The project cost of capital is 8%, and its tax rate is 45%.

a. What would the depreciation expense be each year under each method? Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.

b. Which depreciation method would produce the higher NPV, and how much higher would it be? Do not round intermediate calculations. Round your answer to the nearest cent.

c. The NPV under (-Select-Scenario) will be higher by $?

Reference no: EM132912873

Questions Cloud

How would describe the role of accounting in business : What do you think is the most important reason for gaining the ability to interpret and understand financial documents correctly?
What do you mean by multiplicity of objectives : What do you mean by multiplicity of objectives? Explain using apt examples.
Analyze data and information from the point of creation : Analyze data and information from the point of creation or collection, through the management, storage, and transformation into information and duration of its
Which of set of objectives is consistent with a company : Which of the following set of objectives (set in order of importance) is consistent with a company aiming for sales growth especially in the long term?
What would the depreciation expense be each year : What would the depreciation expense be each year under each method? Enter your answers as positive values. Do not round intermediate calculations
Clarify the alpha helix of the transmembrane area : Information are missing to make cross-public correlations of the presentation of wellbeing frameworks, barely or extensively characterized, in satisfactory deta
Compute the predetermined overhead rates : Compute the predetermined overhead rates used in the Molding Department and the Painting Department
Which is an example of a tactic : Which is an example of a tactic? ABC Company intends to increase market share in the home improvement industry by increasing advertising expenses in 2020.
Language milestone timeline : Language development is a critical component of students' academic and social growth. Special educators are often challenged with the responsibility

Reviews

Write a Review

Financial Accounting Questions & Answers

  How are types of analyses useful to healthcare managers

What is the key difference between financial statement analysis and operating indicator analysis? How are these types of analyses useful to healthcare managers

  What appears to be the ethical issue involved in case

What appears to be the ethical issue involved in case - Is Troy Normand acting improperly or immorally

  How about the financing and investing cash flow sections

Does the company have any marketable securities at the end of the year - How many dollars of marketable securities and how are they classified? Short-term, long-term, or both?

  Determine what will the price be five years from now

Find what will the price be 5 years from now? The bond currently sells for 925. If the yield to maturity remains at its current rate.

  Calculate the cost of each asset

A bank loan of $2,000,000 with interest of 8% was outstanding for the entire 2020 year. Calculate the cost of each asset

  Question carin and ray are partners in an accounting firm

question carin and ray are partners in an accounting firm. the partners have entered into an arms length agreement

  Determine what will the cash flows for project be

The new vans amounts to about $5,100 each. If cost of capital is 12 percent and firm faces a 35 percent tax rate, what will the cash flows for this project be?

  Manufactures and distributes toys throughout south east

Pearl Products Limited of Shenzhen, China, manufactures and distributes toys throughout South East Asia. Three cubic centimeters (cc) of solvent H300 are required to manufacture each unit of Super mix, one of the company's products.

  Prepare annual adjusting entries and post to ledger accounts

Prepare annual adjusting entries and post to the ledger accounts the equipment is depreciated at 10% of its year-end carrying value per year.

  Annual rate period invested intrest compounded future value

Determine the future value of $15,000 under each of the following sets of assumptions: (Use FV of $1) (Round "FV Factors" to 5 decimal places and final answers to the nearest dollar amount.) Annual Rate Period Invested Intrest Compounded Future Value..

  The conservatism constraint

The conservatism constraint: Requires that when more than one equally likely estimate of amounts is expected to be received or paid in the future, then the less optimistic amount should be used.

  Financial model and analysis for publicly traded company

Students - in groups of 1-3 - are to submit a course project at the end of the semester. It will consist of a financial model and analysis for a publicly traded company, including historic and pro forma financial statement analysis. A suggested forma..

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