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X company is considering investing in manufacturing equipment expected to cost $184,000. The equipment has an estimated useful life of four years and a salvage value of $24,000. It is expected to produce incremental cash revenues of $95,000 per year. Zito has an effective income tax rate of 30 percent and a desired rate of return of 12 percent

(a) Determine the net present value and the present value index of the investment, assuming that the company uses straight-line depreciation for financial and income tax reporting

  • Net present value
  • Present value index

(b) Determine the net present value and the present value index of the investment, assuming that the company uses double-declining-balance depreciation for financial and income tax reporting.

  • Net present value
  • Present value index

(c) Determine the payback period and unadjusted rate of return (use average investment), assuming that the company uses straight-line depreciation.

  • Payback in years
  • Unadjusted rate of return

(d) Determine the net present value and the present value index of the investment, assuming that the company uses double-declining-balance depreciation for financial and income tax reporting.

  • Net present value
  • Present value index

(e) Determine the payback period and unadjusted rate of return (use average investment), assuming that the company uses straight-line depreciation

  • Payback in years
  • Unadjusted rate of return

(f) Determine the payback period and unadjusted rate of return (use average investment), assuming that the company uses double-declining-balance depreciation.

  • Payback in years
  • Unadjusted rate of return

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9962050

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