Entries by Grace Wahito

Sampson Corp buys equipment for $95,000

Sampson Corp buys equipment for $95,000 that will last for 7 years. The equipment will generate cash flows of $22,000 per year and will have no salvage value at the end of its life. Ignore taxes. Use 16% required rate of return. (a) What is the present value (PV) of this investment at 16%? (b) […]

 

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Bieber Company has excess capacity on two machines,

Bieber Company has excess capacity on two machines, 24 hours on Machine 105 and 16 hours on Machine 107. To use this excess capacity, the company has two products, known as Product D and Product F, that must use both machines in manufacturing. Both have excess product demand, and the company can sell as many […]

 

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On January 1, Mojo Company purchased a new machine for $100,000

On January 1, Mojo Company purchased a new machine for $100,000 to be depreciated over 5 years. It will have no salvage value at the end of its useful life. For both book and tax purposes, depreciation will be $20,000 per year. The machine is expected to produce annual cash inflows from operations, before income […]

 

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