Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. siclan company problem the siclan company is consi

Siclan Company Problem The Siclan Company is considering opening a new office. The company owns...

50.1K

Verified Solution

Question

Accounting

Siclan Company Problem

The Siclan Company is considering opening a new office. The company owns the building and would sell it for $74,000 after taxes if it does not open the new office. The building has been depreciated down to a zero book value. The equipment that will be used in the building costs $69,000. The equipment that would be used has a 3 year tax life, depreciated straight-line, with 0 scrap value. (If the company tried to sell the equipment at end of year 3, it would receive 0 sales proceeds). (There will be no new revenues after the end of year 3.) No new working capital is required.

Cost of Capital = 15%

Due to opening the office and using the equipment, additional annual Revenues = $100,000

Additional annual Operating cost, excluding depreciation = $20,000

Tax rate = 30%

What is the required cash outflow associated with the acquisition of a new machine at t = 0?

What is the projects NPV?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Manufacturing Income Statement, Statement of Cost of GoodsManufacturedSeveral items are omitted from the income...Manufacturing...

Accounting
Q

two examples of global issues that can overlap between the classical school and Rational choice theory...

Psychology
Q

groups 4 provide a  3-4 paragraph answer for the following questions 1-What are 4 key things you learned about...

General Management
Q

22 An electric dipole is situated in an electric field 22 of uniform intensity E...

Physics
Q

Use quantifiers to make each of the following true where n is a natural number...

Basic Math
Q

Alma bought a laptop computer at a store that gave a 20 percent discount off...

Basic Math
Q

Determine whether the following relation represents a function Give the domain and range for the...

Algebra
Q

3 of inequalities 2 2 y2 1 1 A B 4 D B 5

Algebra
Q

Exercise 5-4A (Algo) Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross...

Accounting
Q

Following is the transaction for Raleys Company to fund their 401k pension plan. Paid Fidelity...

Accounting
Q

If Koch were to purchase a $5,000 piece of equipment for cash, what would be...

Accounting
Q

6. Vermes enters into a contract offering variable consideration. The contract pays him $10,000/month for...

Accounting