Ask Question, Ask an Expert


Ask Accounting Basics Expert

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 (resale value )of 40,000, is in good working order, 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?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M948419

Have any Question? 

Related Questions in Accounting Basics

Practice questionsdescribe a situation in which two of the

Practice questions: Describe a situation in which two of the main accounting concepts might be in conflict. Explain what you consider the correct accounting treatment should be.

Question 1 queenslander ltd operates a cafeacute and gift

Question 1: Queenslander Ltd operates a café and gift shop at Montville in the Sunshine Coast hinterland. You are the accountant for the company and the following items relate to the year ended 30 June 2016: (a) Queensla ...

Discuss the extent to which cost data is useful in the

Discuss the extent to which cost data is useful in the determination of pricing policy. Explain the advantages and disadvantages of presenting cost data for possible utilization in pricing policy determination using an a ...

Practice questionsfarmer george tractors ltd has

Practice questions: Farmer George Tractors Ltd has £500,000 to invest. The net cash flows of two possible projects are as follows: Year Project 1 Project 2   £ £ 1 80,000 90,000 2 100,000 110,000 3 180,000 190,000 4 140, ...

Test 1 write the word correct if the statement is true and

Test 1: Write the word CORRECT if the statement is true and the word WRONG if the statement is false. Print in CAPITAL letters why. 1. All partners, whether capitalist or industrialist, are to share on whatever partnersh ...

Big alrsquos pizza emporium a subsidiary of big alrsquos

Big Al’s Pizza Emporium, a subsidiary of Big Al’s Pizza, Inc., has decided to sell frozen pizzas in its restaurants. Restaurant customers will take these pizzas home and cook them. The restaurants will sell frozen meat p ...

Assignment- fraud in the accounting information systemfor

Assignment- Fraud in the Accounting Information System For this assignment, research the Internet or Strayer databases to locate a firm that was involved in a fraud and / or embezzlement case. Explain how the firm's acco ...

Wayne and maria file a joint tax return on which they

Wayne and Maria file a joint tax return on which they itemize their deductions and report AGI of $50,000. During the year they incurred $1,500 of medical expenses when Maria broke her leg. Furthermore, their dentist info ...

Practice questionsthe following transactions have taken

Practice questions: The following transactions have taken place in a business. Enter the name of the balance sheet item(s) affected under the appropriate column and indicate whether there has been an increase or decrease ...

Taxation law and practice assignment-questionstephanie

TAXATION LAW AND PRACTICE ASSIGNMENT- QUESTION Stephanie Rogan ran her own advertising company.  Stephanie was an advertising executive with a large advertising agency company, Greater Union Advertisers Pty Ltd.  She lef ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate