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Autumn Smart Corp. paid $500,000, in cash, for a piece of equipment 3 years ago. At the beginning of last year, the company spent $50,000
Autumn Smart Corp. paid $500,000, in cash, for a piece of equipment 3 years ago. At the beginning of last year, the company spent $50,000 to update the equipment with the latest technology. The company no longer uses this equipment in its current operations and has received an offer of $100,000 from a firm that would like to purchase it. Autumn Smart is debating whether to sell the equipment or to expand its operations so that the equipment can be used. When evaluating the expansion option, what value, if any, should the firm assign to this equipment as an initial cost of the project? $450,000, because this is the value of the book less depreciation $550,000, because this is the total value of the equipment The book value of the equipment (Total cost - Depreciation) $100,000, because this is the market value of the equipment $0, because the firm already owns the equipment A Question 7 (1 point) Retake question Carlos Slim is evaluating a project that will increase annual sales by $190,000 and annual cash costs by $90,000. The project will initially require $100,000 in fixed assets that will be depreciated straight-line to a zero book value over the 5-year life of the project. The applicable tax rate is 21 percent. What is the annual operating cash flow for this project? $91,100 $71,100 $90,000 Not enough information $110,000
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