Bec Question, Please explain

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  • #188214
    Anonymous
    Inactive

    The bread company is planning to purchase a new machin which it will depreciate on a straigh-line basis over a 10 year period. A full years depreciation will be take in the year of acquisition. The machine is expected to produce cash flow from operations, net of income taxes, of $3,000 i each of the 10 years. The accounting (book value) rate of return is expected to be 10% on the initial increase in required investment. The cost of the new machine will be:

    a:$15,000

    b:$30,000

    c:$13,000

    d$12,000

    The correct answer is A, can someone explain to me how to do this problem…

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  • #590030
    M.O.D.
    Member

    3000 – X/10 (1 year of depreciation) = .1 X (net profit as a percent of investment)

    3000 = .2X

    X = 15000

    Note that taxes are not calculated correctly in the problem. The depreciation expense should be adjusted for the tax effect as well, for the answer to be completely accurate.

    BA Mathematics, UC Berkeley
    Certificates in CPA and EA preparation, College of San Mateo
    CMA I 420, II 470
    FAR 91, AUD Feb 2015 (Gleim self-study)

    #590031
    Anonymous
    Inactive

    And that is why you're a mathematician, M.O.D

    #590032
    Anonymous
    Inactive

    wow, well i got 3 days to bring an average ninja mcq score of 70 up to a real passing score of 75 or higher….

    you would think we could use some sort of variance formula to calculate the ninja mcq score vs actual score variance…

    #590033
    h0wdyus
    Member

    WE will call it Score Quantity Variance.

    FAR - 81 29th Aug 2013
    AUD - 84
    REG - 82
    BEC - 89 29th Aug 2014
    Using Yager

    FROM NJ

    #590034
    Anonymous
    Inactive

    Ninja is absurd in some of the minutiae it tests…

    #590035
    Anonymous
    Inactive

    nick good luck on your upcoming test, im right behind you on the 31st…

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