NOTE: Appendix A and other corresponding data is listed at the bottom of this thread!

A.

The chief ranger of the state's Department of Natural Resources is considering a new plan for fighting forest fires in the state's forest lands. The current plan uses eight recontrol stations, which are scattered throughout the interior ofthe state forest. Each station has a fourperson staff, whose annual compensation totals $340,000. Other costs of operating each base amount to $240,000 per year. The equipment at each base has a current salvage value of $260,000. The buildings at these interior stations have no other use. To demolish them would cost $24,000 each. The chief ranger is considering an alternative plan, which involves four fireecontrol stations located on the perimeter of the state forest. Each station would require a sixperson staff, with annual compensation costs of $440,000. Other operating costs would be $250,000 per base. Building each perimeter station would cost $340,000. The perimeter bases would need helicopters and other equipment costing $640,000 per station. Half ofthe equipment from the interior stations could be used at the perimeter stations. Therefore, only half ofthe equipment at the interior stations would be sold ifthe perimeter stations were built. The state uses a 10 percent hurdle rate for all capital projects. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.} Required: 1. Use the totalcost approach to prepare a netpresentvalue analysis of the chief ranger's two recontrol plans. [Assume that the interior firecontrol stations will be demolished if the perimeter plan is selected. The chief ranger has decided to use a 10year time period for the analysis.) {Round your "Discount factors" to 3 decimal places. Negative amounts should be indicated by a minus sign.) NPV of Interior FireControl Stations NPV 0i Perimeter FireControl Stations Difference in NPV Costs Mind Challenge, Inc., publishes innovative science textbooks for public schools. The company's management recently acquired the following two new pieces of equipment. . Computer-controlled printing press: cost, $306,000; considered to be industrial equipment; expected useful life, 12 years. . Duplicating equipment to be used in the administrative offices: considered to be office equipment; cost, $63,900; expected useful life, six years. The company uses straight-line depreciation for book purposes and the MACRS accelerated depreciation schedule for tax purposes. The firm's tax rate is 30 percent; its after-tax hurdle rate is 10 percent. Neither machine has any salvage value. Use Appendix A and Exhibit 16-9 for your reference. (Use appropriate factor(s) from the tables provided.) Required: For each of the publishing company's new pieces of equipment: 1. Prepare a schedule of the annual depreciation expenses for book purposes. 2. Determine the appropriate MACRS property class. 3. Prepare a schedule of the annual depreciation expenses for tax purposes. 4. Compute the present value of the depreciation tax shield.Printing Press Prepare a schedule of the annual depreciation expenses for book purposes and determine the appropriate MACRS property class. (Round your "Percentage" answer to 2 decimal places (i.e., .1234 should be entered as 12.34). Round your "Discount factor" to 3 decimal places. Round your final answers to whole dollar.) Ofce Equipment l $ l 306,000 1429 X % 306,000 24.49 x \"/6 306,000 17.49 x \"/6 306,000 12.49 X % 306,000 8.93 X % 306,000 8.92 x % 8.93 x 306,000 % 4.46 X 306,000 % EDWHJGIU'IJLLAJMk 0 n l o 0 0 0,00 0.000 Present value of tax shield Office Printing Press Equipment Prepare a schedule of the annual depreciation expenses for tax purposes and compute the present value of the depreciation tax shield. (Round your "Percentage" answer to 2 decimal places (i.e., .1234 should be entered as 12.34). Round your "Discount factor" to 3 decimal places. Round your final answers to whole dollar.) Straight-Line Cash Flow: Discount Present Year Depreciation for MACRS Depreciation Tax Savings Factor Value Book Purposes 1 X % 2 X 3 X 4 5 X Present value of tax shieldThe management of TrieCounty Air Taxi. Inc.. is considering the replacement of an old machine used in its helicopter repair facility. It is fully depreciated but it can be used by the corporation through 20x5. lf management decides to replace the old machine, James Transportation Company has offered to purchase it for $65,000 on the replacement date. The old machine would have no salvage value in 20x5. If the replacement occurs, a new machine would be acquired from Hillcrest Industries on December 31, 20x1. The purchase price of $1,000,000 for the new machine would be paid in cash at the time of replacement. Due to the increased efficiency of the new machine, estimated annual cash savings of $320,000 would be generated through 20x5, the end of its expected useful life. The new machine is not expected to have any salvage value at the end of 20x5. TrieCounty's management requires all investments to earn a 14 percent aerrtax return. The company's tax rate is 30 percent. The new machine would be classied as threeryear property for MACRS purposes. Use Appendix A and Exhibit 1679. for your reference. (Use appropriate factorts) from the tables provided.) Required: 1. Compute the net present value of the machine replacement investment. 3. Compute the payback period for the replacement of the machine. 4. How much would the salvage value ofthe new machine have to be on December 31, 20x5, in order to turn the machine replacement into an acceptable investment? Required 1 Required 3 Required 4 Compute the net present value of the machine replacement investment. (Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to the nearest whole dollar.) Net present value $ 502,699 XRequired 1 Required 3 Required 4 Compute the payback period for the replacement of the machine. (Round your answer to 1 decimal place.) Payback period 1.5 X yearsRequired 1 Required 3 Required 4 How much would the salvage value of the new machine have to be on December 31, 20x5, in order to turn the machine replacement into an acceptable investment? (Round your intermediate calculations and final answer to the nearest whole dollar.) Salvage value of the new machine\fFuture Value and Present Value Tables Table I Future Value of $1.00(1 + r)" Period 4% 6% 10% 12% 14% 20% 1 1.040 1.060 1.080 1.100 1.120 1.140 1.200 2 1.032 1.124 1.166 1.210 1.254 1.300 1.440 3 1.125 1.191 1.260 1.331 1.405 1.482 1.728 4 1.170 1.263 1.361 1.464 1.574 1.689 2.074 5 1.217 1.338 1.469 1.611 1.762 1.925 2.488 6 1.265 1.419 1.587 1.772 1.974 2.195 2.986 7 1.316 1.504 1.714 1.949 2.211 2.502 3.583 8 1.369 1.594 1.851 2.144 2.476 2.853 4.300 9 1.423 1.690 1.999 2.359 2.773 3.252 5.160 10 1.480 1.791 2.159 2.594 3.106 3.707 6.192 11 1.540 1.898 2.332 2.853 3.479 4.226 7.430 12 1.601 2.012 2.518 3.139 3.896 4.818 8.916 13 1.665 2.133 2.720 3.452 4.364 5.492 10.699 14 1.732 2.261 2.937 3.798 4.887 6.261 12.839 15 1.801 2.397 3.172 4.177 5.474 7.138 15.407 20 2.191 3.207 4.661 6.728 9.646 13.743 38.338 30 3.243 5.744 10.063 17.450 29.960 50.950 237.380 40 4.801 10.286 21.725 45.260 93.051 188.880 1,469.800Table II (1 + r)" - 1 Future Value of a Series of $1.00 Cash Flows (Ordinary Annuity) Period 4% 6% 10% 12% 14% 20% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2.040 2.060 2.080 2.100 2.120 2.140 2.220 3 3.122 3.184 3.246 3.310 3.374 3.440 3.640 4 4.247 4.375 4.506 4.641 4.779 4.921 5.368 5.416 5.637 5.867 6.105 6.353 6.610 7.442 6 6.633 6.975 7.336 7.716 8.115 8.536 9.930 7 7.898 8.394 8.923 9.487 10.089 10.730 12.916 9.214 9.898 10.637 11.436 12.300 13.233 16.499 10.583 11.491 12.488 13.580 14.776 16.085 20.799 10 12.006 13.181 14.487 15.938 17.549 19.337 25.959 11 13.486 14.972 16.646 18.531 20.655 23.045 32.150 12 15.026 16.870 18.977 21.385 24.133 27.271 39.580 13 16.627 18.882 21.495 24.523 28.029 32.039 48.497 14 18.292 21.015 24.215 27.976 32.393 37.581 59.196 15 20.024 23.276 27.152 31.773 37.280 43.842 72.035 20 29.778 36.778 45.762 57.276 75.052 91.025 186.690 30 56.085 79.058 113.283 164.496 241.330 356.790 1,181.900 40 95.026 154.762 259.057 442.597 767.090 1,342.000 7,343.900Table III 1 Present Value of $1.00 (1 + +) Period 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% .962 .943 .926 .909 .893 .877 .862 .847 .833 .820 .806 .794 .781 .769 .758 .925 .890 .857 .826 .797 .769 .743 .718 .694 .672 .650 .630 .610 .592 .574 3 .889 .840 .794 .751 .712 .675 .641 .609 .579 .551 .524 .500 .477 .455 .435 .855 .792 .735 .683 .636 .592 .552 .516 .482 .451 .423 .397 .373 .350 .329 .822 .747 .681 .621 .567 .519 .476 437 .402 .370 .341 .315 .291 .269 .250 6 790 .630 .564 .507 .456 .410 .370 .335 303 .275 .250 .227 .207 .189 7 .760 .665 .583 .513 .452 .400 .354 .314 .279 .249 .222 .198 .178 .159 .143 S .731 .627 .540 .467 .404 .351 .305 .266 .233 .204 .179 .157 .139 .123 .108 9 .703 .592 .500 .424 .361 .30S .263 .225 .194 .167 .144 .125 . 108 .094 .082 10 .676 .558 .463 .386 .322 .270 .227 .191 .162 .137 .116 .099 .085 .073 .062 11 .650 .527 .429 .350 .287 .237 .195 .162 .135 .112 .094 .079 .066 .056 .047 12 .625 497 .397 .319 .257 208 .168 .137 .112 092 076 .062 .052 .043 .036 13 .601 .469 .368 .290 .229 .182 .145 .116 .093 .075 .061 .050 .040 .033 .027 14 577 .442 .340 .263 .205 .160 .125 .099 .078 .062 .049 .039 .032 .025 .021 15 .555 .417 .315 .239 . 183 .140 .108 .084 .065 .051 .040 .031 .025 .020 .016 20 .456 .312 .215 .149 .104 .073 .051 .037 .026 .019 .014 .010 .007 .005 .004 30 .308 .174 .099 .057 .033 .020 .012 .007 .004 .003 .002 .001 .001 40 .208 .097 .046 .022 .011 .005 .003 .001 .001