At the beginning of the year 2022, DeAngelo Caterering bought a $60,000 food truck. It will require $10,500 to ship to California. The custom paint job will cost $2,500 and the suspension will have to be customized to handle a brick oven, which will cost 3,000. Regular maintenance throughout the year will be $1,200. The truck is expected to last 5 years and the salvage value is $11,000. All expenditures paid in cash. Compute the total amount to be capitalized for the cost of the Food Truck and the journal entry required to record the total pruchase of the asset (Please show all calculations)
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- Blossom, Inc. is considering the purchase of a warehouse directly across the street from its manufacturing plant. Blossom currently warehouses its inventory in a public warehouse across town. Rent on the warehouse and delivering and picking up inventory cost Blossom $48960 per year. The building will cost Blossom $459000. Blossom will depreciate the building for 20 years. At the end of 20 years, the building will have a $127500 salvage value. Blossom’s required rate of return is 11%. suggest whether he should buy warehouseThe XYZ company is thinking about upgrading their 5-year-old machine with a new one. The machine was initially purchased for $50,000, with a projected lifespan of 10 years. The operation and maintenance cost of the old machine began at $500 in year 1 and has increased by $100 each year. This is predicted to continue until the end of the machine's useful life. The estimated salvage value if sold now is $15,000, or $10,000 at the end of year 10. The current yearly revenue with this machine is $15000The new machine will initially be purchased for $60,000 with a lifespan of 8 years. The first year's operating and maintenance cost will be $1500 due to installation, will be to $500 in the second year, then increase by $50 per year until the end of useful life. The yearly revenue is estimated at $17000 for the new machine, with a salvage value of $15000 at the end of 8 years. Both machines are depreciable with CCA (30%), MARR is 20%, and the tax rate is 40%. Should the XYZ company replace the…J&M Manufacturing plans on purchasing a new assembly machine for $32,000 to automate one of its current manufacturing operations. It will cost an additional $3,500 to have the new machine installed. With the newmachine, J&M expects to save $12,000 in annual operating and maintenance costs. The machine will last five years with an expected salvage value of $5,000.(a) How long will it take to recover the investment (plus installation cost)?(b) If J&M's interest rate is known to be 17%, determine the discounted payback period.
- Ivanhoe Lumber, Inc., is considering purchasing a new wood saw that costs $45,000. The saw will generate revenues of $100,000 per year for five years. The cost of materials and labor needed to generate these revenues will total $60,000 per year, and other cash expenses will be $10,000 per year. The machine is expected to sell for $1,000 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Ivanhoe's tax rate is 26 percent, and its opportunity cost of capital is 13.70 percent. What is the project's NPV? (Do not round intermediate calculations. Round final answer to 0 decimal places, e.g. 5,275.) NPV $ Should the company purchase the saw? The company the saw.Larson Manufacturing is considering purchasing a new injection-molding machine for $250,000to expand its production capacity. It will cost anadditional $20,000 to do the site preparation. Withthe new injection-molding machine installed, Larson Manufacturing expects to increase its revenueby $90,000. The machine will be used for five years,with an expected salvage value of $75,000. At aninterest rate of 12%, would the purchase of the injection-molding machine be justified?Crane Lumber, Inc., is considering purchasing a new wood saw that costs $75,000. The saw will generate revenues of $100,000 per year for five years. The cost of materials and labor needed to generate these revenues will total $60,000 per year, and other cash expenses will be $10,000 per year. The machine is expected to sell for $4,400 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Crane’s tax rate is 34 percent, and its opportunity cost of capital is 10.50 percent.- What is the project's NPV? - The copmany should (buy/not buy) the machine?
- Crane Lumber, Inc., is considering purchasing a new wood saw that costs $75,000. The saw will generate revenues of $100,000 per year for five years. The cost of materials and labor needed to generate these revenues will total $60,000 per year, and other cash expenses will be $10,000 per year. The machine is expected to sell for $4,400 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Crane’s tax rate is 34 percent, and its opportunity cost of capital is 10.50 percent. - What is the project's NPV?Crane Lumber, Inc., is considering purchasing a new wood saw that costs $40,000. The saw will generate revenues of $100,000 per year for five years. The cost of materials and labor needed to generate these revenues will total $60,000 per year, and other cash expenses will be $10,000 per year. The machine is expected to sell for $3,900 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Crane’s tax rate is 26 percent, and its opportunity cost of capital is 14.20 percent. What is the project's NPV? (Do not round intermediate calculations. Round final answer to the nearest whole dollar, e.g. 5,275.)Cullumber Lumber, is considering purchasing a new wood saw that costs $40,000. The saw will generate revenues of $100,000 per year for five yearsThe cost of materials and labor needed to generate these revenues will total $60,000 per yearand other cash expenses will be $10,000 per year. The machine is expected to sell for $2.000 at the end of its fiveyear life and will be depreciated on a straight-line basis over five years to zeroCullumber's tax rate is 26 percentand its opportunity cost of capital is 14.20 percent. What is the project's NPV(Do not round intermediate calculationsRound final answer to decimal places, e.g. 5,275)
- Crane Lumber, Inc., is considering purchasing a new wood saw that costs $80,000. The saw will generate revenues of $100,000 per year for five years. The cost of materials and labor needed to generate these revenues will total $60,000 per year, and other cash expenses will be $10,000 per year. The machine is expected to sell for $2,700 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Crane’s tax rate is 26 percent, and its opportunity cost of capital is 17.60 percent.On January 1, 2024, Nimble Delivery Service purchased a truck at a cost of $65,000. Before placing the truck in service, Nimble spent $4,000 painting it, $800 replacing tires, and $9,700 overhauling the engine. The truck should remain in service for five years and have a residual value of $6,000. The truck's annual mileage is expected to be 23,000 miles in each of the first four years and 13,000 miles in the fifth year-105,000 miles in total. In deciding which depreciation method to use, Harvey Wamer, the general manager, requests a depreciation schedule for each of the depreciation methods (straight-line, units-of-production, and double-declining-balance) Read the requirements Requirement 1. Prepare a depreciation schedule for each depreciation method, showing asset cost, depreciation expense, accumulated depreciation, and asset book value. Begin by preparing a depreciation schedule using the straight-line method. Straight-Line Depreciation Schedule Date 1-1-2024 12-31-2024 12-31-2025…The management of Jasper Equipment Company is planning to purchase a new milling machine that will cost $160,000 installed. The old milling machine has been fully depreciated but can be sold for $15,000. The new machine will be depreciated on a straight-line basis over its 10-year economic life to an estimated salvage value of $10,000. If this milling machine will save Jasper $20,000 a year in production expenses, what are the annual net cash flows associated with the purchase of this machine? Assume a marginal tax rate of 40 percent. a. $15,000 b. $27,000 c. $21,000 d. $18,000