Table 11.2
Computer Disk Duplicators, Inc. has been considering several capital investment proposals for the year beginning in 2014. For each investment proposal, the relevant cash flows and other relevant financial data are summarized in the table below. In the case of a replacement decision, the total installed cost of the equipment will be partially offset by the sale of existing equipment. The firm is subject to a 40 percent tax rate on ordinary income and on long-term capital gains. The firm's cost of capital is 15 percent.
________________________________________________________ *Not applicable
-For Proposal 3, the incremental depreciation expense for year 6 is ________. (See Table 11.2)

Question

Table 11.2
Computer Disk Duplicators, Inc. has been considering several capital investment proposals for the year beginning in 2014. For each investment proposal, the relevant cash flows and other relevant financial data are summarized in the table below. In the case of a replacement decision, the total installed cost of the equipment will be partially offset by the sale of existing equipment. The firm is subject to a 40 percent tax rate on ordinary income and on long-term capital gains. The firm's cost of capital is 15 percent.
________________________________________________________  *Not applicable
-For Proposal 3, the incremental depreciation expense for year 6 is ________. (See Table 11.2)

Quizplus · Accepted Answer

The incremental depreciation expense for year 6 can be calculated based on the information provided in Table 11.2. If Proposal 3 involves an asset that depreciates over time, the incremental depreciation for year 6 would be the difference in total depreciation from year 5 to year 6, which is given as $15,750.

Table 11.2 Computer Disk Duplicators, Inc. Has Been Considering Several Capital Investment