AMT, Inc., is considering the purchase of a digital camera for maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineers.
a. You have been asked by management to determine the PW of the EVA of this equipment, assuming the following estimates: capital investment=$337,000; market value at end of year six=$123,000; annual revenues=$110,000; annual expenses=$8,000; equipment life=6 years; effective income tax rate=24%;
and after-tax MARR=8% per year. MACRS depreciation will be used with a five-year recovery period.
b. Compute the PW of the equipment's ATCFs
Amanufacturer of aerospace products purchased two flexible assembly cells for $490,000 each. Delivery and insurance charges were $31,000, and installation of the cells cost another $51,000. a. Determine the cost basis of the two cells. b. What is the class life of the cells? c. What is the MACRS depreciation in year four? d. If the cells are sold to another company for $110,000 each at the end of year six, how much is the recaptured depreciation? Click the icon to view the partial listing of depreciable assets used in business. cil i More Info - X i More Info a. The - X MACRS Class Lives and Recovery Periods Year Asset Class 00.11 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 1 2 3 4 5 6 7 8 Descriptions of Assets Office furniture and equipment Information systems, including computers Automobiles, taxis Buses Light general purpose trucks Heavy general purpose trucks Tractor units for use over the road Agriculture Mining Production of petroleum and natural gas Petroleum refining Construction Manufacture of carpets Manufacture of wood products and furniture Manufacture of chemicals and allied products Manufacture of rubber products Manufacture of cement Manufacture of fabricated metal products Manufacture of electronic components, products, and systems Manufacture of motor vehicles Manufacture of aerospace products Telephone central office equipment Electric utility steam production plant Gas utility distribution facilities Recreation 9 10 Class Life 10 6 3 9 4 6 4 10 10 14 16 6 9 10 9.5 14 20 12 6 12 10 18 28 35 10 Recovery Periods GDS ADS 7 10 5 5 5 5 5 9 5 5 5 6 3 4 7 10 7 10 7 14 10 16 5 6 5 9 7 10 5 9.5 7 14 15 20 7 12 5 6 7 12 7 10 10 18 20 28 20 35 7 10 GDS Recovery Rates (ru) for the Six Personal Property Classes Recovery Period (and Property Class) 3-year 5-year 7-yeara 10-year 15-year 0.3333 0.2000 0.1429 0.1000 0.0500 0.4445 0.3200 0.2449 0.1800 0.0950 0.1481 0.1920 0.1749 0.1440 0.0855 0.0741 0.1152 0.1249 0.1152 0.0770 0.1152 0.0893 0.0922 0.0693 0.0576 0.0892 0.0737 0.0623 0.0893 0.0655 0.0590 0.0446 0.0655 0.0590 0.0656 0.0591 0.0655 0.0590 0.0328 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 20-year 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 11 223 24.4 28.0 30.1 32.2 34.0 36.0 37.11 37.2 48.12 49.13 49.21 79.0 12 13 14 15 16 17 18 19 20 21 These rates are determined by applying the 200% DB method (with switchover to the SL method) to the recovery period with the half-year convention applied to the first and last years. Rates for each period must sum to 1.0000 These rates are determined with the 150% DB method instead of the 200% DB method (with switchover to the SL method) and are rounded off to four decimal places. Enter ya Print Done Amanufacturer of aerospace products purchased two flexible assembly cells for $490,000 each. Delivery and insurance charges were $31,000, and installation of the cells cost another $51,000. a. Determine the cost basis of the two cells. b. What is the class life of the cells? c. What is the MACRS depreciation in year four? d. If the cells are sold to another company for $110,000 each at the end of year six, how much is the recaptured depreciation? Click the icon to view the partial listing of depreciable assets used in business. cil i More Info - X i More Info a. The - X MACRS Class Lives and Recovery Periods Year Asset Class 00.11 00.12 00.22 00.23 00.241 00.242 00.26 01.1 10.0 13.2 13.3 15.0 1 2 3 4 5 6 7 8 Descriptions of Assets Office furniture and equipment Information systems, including computers Automobiles, taxis Buses Light general purpose trucks Heavy general purpose trucks Tractor units for use over the road Agriculture Mining Production of petroleum and natural gas Petroleum refining Construction Manufacture of carpets Manufacture of wood products and furniture Manufacture of chemicals and allied products Manufacture of rubber products Manufacture of cement Manufacture of fabricated metal products Manufacture of electronic components, products, and systems Manufacture of motor vehicles Manufacture of aerospace products Telephone central office equipment Electric utility steam production plant Gas utility distribution facilities Recreation 9 10 Class Life 10 6 3 9 4 6 4 10 10 14 16 6 9 10 9.5 14 20 12 6 12 10 18 28 35 10 Recovery Periods GDS ADS 7 10 5 5 5 5 5 9 5 5 5 6 3 4 7 10 7 10 7 14 10 16 5 6 5 9 7 10 5 9.5 7 14 15 20 7 12 5 6 7 12 7 10 10 18 20 28 20 35 7 10 GDS Recovery Rates (ru) for the Six Personal Property Classes Recovery Period (and Property Class) 3-year 5-year 7-yeara 10-year 15-year 0.3333 0.2000 0.1429 0.1000 0.0500 0.4445 0.3200 0.2449 0.1800 0.0950 0.1481 0.1920 0.1749 0.1440 0.0855 0.0741 0.1152 0.1249 0.1152 0.0770 0.1152 0.0893 0.0922 0.0693 0.0576 0.0892 0.0737 0.0623 0.0893 0.0655 0.0590 0.0446 0.0655 0.0590 0.0656 0.0591 0.0655 0.0590 0.0328 0.0591 0.0590 0.0591 0.0590 0.0591 0.0295 20-year 0.0375 0.0722 0.0668 0.0618 0.0571 0.0528 0.0489 0.0452 0.0447 0.0447 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0446 0.0223 11 223 24.4 28.0 30.1 32.2 34.0 36.0 37.11 37.2 48.12 49.13 49.21 79.0 12 13 14 15 16 17 18 19 20 21 These rates are determined by applying the 200% DB method (with switchover to the SL method) to the recovery period with the half-year convention applied to the first and last years. Rates for each period must sum to 1.0000 These rates are determined with the 150% DB method instead of the 200% DB method (with switchover to the SL method) and are rounded off to four decimal places. Enter ya Print Done
