PROBLEM #1A
Given the data below, identify the depreciation method used for each depreciation schedule as of the following (please note that it is not necessary to show all calculations, but enough to show how you know which method is represented):

First cost $80,000
Book depreciation life 7 years
MACRS property class 7-year
Salvage value $24,000

Depreciation Schedule
N A B C D
1 $14,000 22,857 11,429 22,857
2 12,000 16,327 19,592 16,327
3 10,000 11,661 13,994 11,661
4 8,000 5,154 9,996 8,330
5 6,000 0 7,140 6,942
6 4,000 0 7,140 6,942
7 2,000 0 7,140 6,942
8 0 0 3,570 0
Here are the choices . . .

DDB with conversion to straight-line, assuming a zero salvage value
MACRS 7-year (with half-year convention of course) -- under MACRS, the salvage value is always treated as zero.

PROBLEM #1B
For each of the following cash flows, calculate the payback period (to two places after the decimal, i.e. 7.95 years not 8 years):

Project's Cash Flow ($)
N A B C D
0 ($1,700) ($4,200) ($4,800) ($3,300)
1 300 2,000 2,000 5,000
2 300 1,500 2,000 3,000
3 300 1,500 2,000 -2,000
4 300 500 5,000 1,000
5 300 500 5,000 1,000
6 300 1,500 2,000
7 300 3,000
8 300

PROBLEM #1C
Best Friends Manufacturing is purchasing a large tract of land for a new facility. Its loan is for $3 million at an interest rate of 10% and it will be paid off in 15 equal annual payments. If Best Friends' borrowed principal were to change by plus or minus 10%, the interest rate by plus or minus 2.0%, the number of years to be between 10 years and 30 years, which changes would be most significant to the equal annual payments?
Use a spider plot. The Spider Plot must be drawn, labeled, and shown as part of the problem.
Which changes would be most significant to the equal annual payments?

PROBLEM #1D
Consider two investments A and B with the following sequences of cash flows:

Net Cash Flow
n Project A Project B
0 ($120,000) ($100,000)
1 20,000 15,000
2 20,000 15,000
3 120,000 130,000
(a) Compute the IRR for each investment.
(b) At an MARR = 16%, determine the acceptability of each project.
(c) If A and B are mutually exclusive projects, which project would you select based on the rate of return?

See the attached file.
You are the CFO of a 720-bed tertiary care hospital. You have been presented with a capital expenditure request for a state-of-the-art MRI machine to be purchased on 01-01-09 for a cost of $1,250,000 with a useful life of 6 years and an expected salvage value of $35,000.
Calculate depreciation fo

Is it appropriate to calculate depreciation using two different methods? Which depreciation method gives you the highest depreciation expense in the first year? Why?

Wendy is evaluating a capital budgeting project that should last for 4years. The project requires $800,000 of equipment. She is unsure what depreciation method to use in her analysis, straight-line or the 3-year MACRS accelerated method. Under straight-line depreciation, the cost of the equipment would be depreciated evenly over

Millco, Inc., acquired a machine that cost $410,000 early in 2013. The machine is expected to last for ten years, and its estimated salvage value at the end of its life is $61,000.
a. Using straight-line depreciation, calculate the depreciation expense to be recognized in the first year of the machine's life and calculate

Undertake both a declining balance and straight -line depreciation of an item of capital expenditure of $2 million. The declining balance deprecation rate is 30%,effective tax rate is 45%, cost of capital is 10% and straight -line depreciation rate is 20%.

Wendy's boss wants to use straight-line depreciation for the new expansion project because he said it will give higher net income in earlier years and give him a larger bonus. The project will last 4 years and requires$1,700,000 of equipment. The company could either straight line or the 3-year MACRS accelerated method. Under

Kristin is evaluating a capital budgeting project that should last for 4 years. The project requires $800,000 of equipment. She is unsure what depreciation method to use in her analysis, straight-line or the 3-year MACRS accelerated method. Under that straight-line depreciation, the cost of the equipment would be depreciated ove

Please include in-text citations and references used. Thank you.
1. Cost of Capital - If you were going to start a company, let's say a restaurant, and I was going to take $400,000 to get it opened, how would you finance the initial investment? Things to consider are debt, equity, terms, and sources.
2. Risk & Return - G