Lec-Chap 7 review - construction equipment costs $200,000...

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Chapter 7 Review problems
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Problem 7-7 Cisco is purchasing a new bar code-scanning device for its service center in SFO. Operating expenses for the new system are $10,000 per year, and the useful life of the system is expected to be 5 years. SV is equal to 25% of hardware cost. a.BV at EOY 3 if using SL method? b.After 2 years of SL method, switch to 200% DBM. BV at EOY 4? Cost item Cost Hardware $160,000 Training $15,000 Installation $15,000
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Problem 7-14 During its current tax year, pharmaceutical company buys mixing tank with fair market price of $120,000. Replaced a smaller mixing tank with BV of $15,000. Old tank was used as trade-in. Cash price was set at $99,500. MACRS class life is 9.5 years. a. Under GDS, depreciation deduction in year 3? b. Under GDS, BV at EOY 4? c. If 200% DB depreciation had been used, cumulative depreciation at EOY 4?
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Problem 7-29 Your company has signed a 3-year contract for some construction work. Heavy
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Unformatted text preview: construction equipment costs $200,000 and qualifies for 5-year MACRS depreciation. At the end of 3 years, you expect to be able to sell equipment for $70,000. Projected operating expense is $65,000 per year. What is after-tax equivalent uniform annual cost (EUAC) of owning and operating this equipment? Effective income tax rate is 40%, and after-tax MARR is 12% per year. Problem 7-36 Two pipes are being considered to replace existing pipes. Data: Depreciation is by using SL method. Income tax rate of 40%. MARR after taxes of 12% per year. Which pipe fitting to choose? List any assumptions made. Plastic Copper Capital investment $5,000 $10,000 Useful (class) life 5 years 10 years Salvage value $1,000 $5,000 Annual expenses $300 $100 MV at end $0 $0...
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This note was uploaded on 02/07/2012 for the course IE 343 taught by Professor Vincent,g during the Spring '08 term at Purdue University-West Lafayette.

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Lec-Chap 7 review - construction equipment costs $200,000...

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