Question

Saul Cervantes has just purchased some equipment for his
landscaping business. For this equipment he must pay the following
amounts at the end of the next five years: $13,450, $8,970, $9,050,
$12,070, and $11,870. If the appropriate discount rate is 10.300
percent, what is the cost in today’s dollars of the equipment Saul
purchased today? *(Round answer to 2 decimal places,
e.g. 15.25.)*

Present value | $ |

Answer #1

Kyle decides to buy some equipment for his lawn mowing business.
For this equipment, he must pay the following amounts:
a) Now $0 End of year 1: $10,000 End of Year 2: $8,500 End of
year 3: $9,700 If the appropriate discount rate is of 12 percent
p.a. compounding semi-annually, calculate the value of the
equipment Kyle purchased, in today’s dollars.
b) Jack borrows $10,000 today to be paid off in three equal
year-end amounts. The interest rate on the...

Cullumber Corporation just purchased computing equipment for
$21,000. The equipment will be depreciated using a five-year MACRS
depreciation schedule. If the equipment is sold at the end of its
fourth year for $11,000, what are the after-tax proceeds from the
sale, assuming the marginal tax rate is 35 percent?
(Round answer to 2 decimal places, e.g.
15.25.)
After-tax proceeds
$enter the After-tax proceeds in dollars rounded to 2 decimal
places

Colby is in the furniture moving business. He has some equipment
that he purchased new three years ago for $25,000. At the time, his
accountant told him to depreciate it straight line for five years.
Now there is a better machine out and Colby would like to dispose
of his old machine, but he can get only $7,000 for it. Colby is in
the 21% tax bracket.
What is the book value of the old machine? ___________
What is the...

Pierre Dupont just received a cash gift from his grandfather. He
plans to invest in a five-year bond issued by Venice Corp. that
pays an annual coupon of 4.86 percent. If the current market rate
is 9.51 percent, what is the maximum amount Pierre should be
willing to pay for this bond? (Round answer to 2
decimal places, e.g. 15.25.)
Pierre should pay
$

Anthony Walker just received a cash gift from his grandfather.
He plans to invest in a five-year bond issued by Sandhill Corp.
that pays an annual coupon rate of 4.0 percent. If the current
market rate is 8.50 percent, what is the maximum amount Anthony
should be willing to pay for this bond? (Round answer to 2 decimal
places, e.g. 15.25.)
Anthony should pay
?

Mark Harris just received a cash gift from his grandfather. He
plans to invest in a five-year bond issued by Cullumber Corp. that
pays an annual coupon rate of 4.5 percent. If the current market
rate is 7.50 percent, what is the maximum amount Mark should be
willing to pay for this bond? (Round answer to 2 decimal places,
e.g. 15.25.) Mark should pay $enter the maximum amount that should
be paid rounded to 2 decimal places

Amad has opened a new business and purchased some new IT
equipment (five-year property) for $250,000 and office furniture
(seven-year property) for $350,000 on April 9, 2020. He would like
to elect the Section 179 expensing in the amount of $500,000 and
use MACRS for the balance. He does not want to take the bonus
depreciation. He expects his income from the business to be
$540,000 (before deducting for the Section 179 expense). He is not
sure which asset should...

Bob Johnson is considering purchasing a new piece of equipment
for his business. The machine costs $160,000. Bob estimates that
the machine can produce $43,000 cash inflow per year for the next
five years. His cost of capital is 12 percent. Based upon the net
present value of this investment, Bob should
Group of answer choices
invest in the equipment.
invest in the machine if he can get a higher cost of
capital.
not invest in the machine.
Cannot tell...

Chris has just turned 60 and is looking at his retirement
options. He’s worked for a public accounting firm for 37 years and
the partnership has offered him two pension options: 1. In the
first option, Chris retires today and they pay him a retirement
income of $30,000 per year. (Although unrealistic, let’s assume
that all payments are at the end of the year. So if Chris retires
today, his first payment will be at the end of the first...

Lanyard purchased office equipment for use in his business (7
year property). He paid 100,000 for the equipment on july 1, 2017.
Lanyard did not purchase any other property during the year. for
2017, his business ha a net income of 350,000, before depreciation
and before considering the election to expense.
A) what is the maximum amount that lanyard can deduct in 2017
under the election to expense?
B) What is the total depreciation (regular depreciation under
the amount allowed...

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