16. A car costs #800,000, 4 years ago, and the salvage value is #50,000, 6 years from now. If it is to be replaced by a new one and the trade-in value is P450,000, find the sunk cost if money is worth 12% O

16. A car costs #800,000, 4 years ago, and the salvage value is #50,000, 6 years from now. If it is to be replaced by a new one and the trade-in value is P450,000, find the sunk cost if money is worth 12% O

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: 19. A new product requires an initial investment of $4 million and will be depreciated straight-line…

A: Break Even Point :— It is the point of production where total cost is equal to total revenue. At…

Q: ezero salvage value. It would offer the following profics to the comp NET PROFIT 68.000 -52.000…

A: Net Present Value and Payback period are used in capital budgeting to evaluate the profitability of…

Q: Which is the accounting rate of return using the average investment?

A: Summary of the relevant information as provided in the question : cost of investment = £…

Q: of equipm S = 120,00 ies is estin ve AW

A: Given first cost of $165,000, market (salvage) value described S = 120,000 – 23,000k, AOC = 60,000 +…

Q: Ramson Corporation is considering purchasing a machine that would cost $285,120 and have a useful…

A: The question is related to Capital Budgeting. The pay-back period is the length of time required to…

Q: A brand new car costs ₱500,000 and the salvage value is 10% of the original cost after 20 years.…

A: The straight-line depreciation method gradually reduces the value of an asset over time till it…

Q: A new machine that will lead tø savings in labour costs of $16,000 per year can be pur- chased for…

A: Before accepting any capital investment projects, a company should carry out an NPV analysis. Net…

Q: 1. Consider the following alternatives: First cost 5000 10,000 Annual Maintenance 500 200…

A: Rate of return analysis is done to choose a project with a better return on the cost of the…

Q: pender is P311,000 and a salvage D00, find the annual cost of perpetual service.

A: Annual Cost: It represents the annuity stream of periodic costs made at the end of each period. It…

Q: 2. Two equipment are to be evaluated. Equipment A cost P500,000 will last for 20 years and have a…

A: Increment cost is 1.8 times and Incremental production rate is 2 times so Equipment B is more…

Q: Three mutually exclusive projects are being considered. First cost 2000 3000 4000 uniform…

A: AW, project A = 2,000 x A/P (8%, 5) +200+1,000 x A, 5)= -2000 +0.2505+200+1,000×0.1705=…

Q: A certain machine costs GH¢25000 and lasts 6 years, after which time it has a scrap value of…

A: A capitalized cost of an asset is the cost incurred on an asset to put it to use. Capitalized cost…

Q: a) A buyer pays 23,000 for a washing machine at a 10 % discount, compute the original price of the…

A: Note: Since you have posted multiple questions, we will solve the first question. Please submit a…

Q: What is the smallest acceptable annual income from a project which has a $81,524 investment cost and…

A: The minimum possible required return at which a company is willing to invest its funds is term as…

Q: project breakeven.

A: Break even production volume = (Fixed costs + Target profit)/Contribution per unit

Q: nas a project with a $28 000 first cost that returns $5000 per year over its 1 value of $3000 at the…

A: in this problem we have to calculate present value of benefits and salvage value and calculate…

Q: 4. A company is paying $30 per part for welding operations. They can buy a welding machine with an…

A: Operating cost- Operating costs are connected with the maintenance and management of a business on a…

Q: Acme Company is considering whether to replace an old machine with a new machine. The new machine…

A: Under the replacement of an old machine with a new machine the present value of cost saving is to be…

Q: With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine…

A: The objective of the question is to find the market value of Machine X such that its Annual Worth…

Q: Margaret has a project with a $28 000 first cost that returms $5000 peryea overits 10-yea life. It…

A: given, initial cost = $28000 n = 10 annual return = $5000 salvage value = $3000 r=5%

Q: Margaret has a project with a $28 000 first cost that returns $5000 per year over its 10-year life.…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: A machine costs ₱40,000 for 6 years and has a salvage value of ₱4,000. If money is worth 3%, how…

A: Both the machines i.e. 6 years life and 10 years life machine will have same equivalent uniform…

Q: You want to buy a new machine. It's going to cost $200,000 and have a salvage value of $15,000 after…

A: Here, Cost = $200,000 Salvage value = $15,000 Time period = 7 years Annual operating costs =…

Q: find the sunk cost using the Sum of Years Digit Method.

A: Sunk costs are irrelevant, as they do not affect the future cash flows. Future costs, which cannot…

Q: for 6 years and has a salvage value of P 30, 000.00. How much could an investor afford to pay for

A: Equivalent annual cost is important in decision making and that have lower annual cost are best…

Q: The buying price of a shovel was 100,000$, the annual cost of maintenance was 0,000$ for 20 years,…

A: Solution Given Buying price 100000 Annual cost of maintenance 30000 Number of years…

Q: The cost of a replacement packaging machine is $95,000. The machine is anticipated to reduce the…

A: In this we have to calculate the annual cash flow and find out the present value of option.

Q: 1. Device A: Costs $12,000 and saves $3,000 annually. Its salvage value is $1,000 2. Device B: Costs…

A: Internal Rate of Return (IRR) is a capital budgeting technique that equates current cash outflows…

Q: for Fab Fabricating. At an initial cost of $8000 and zero salvage value, using IRR, are they a good…

A: Internal Rate of Return (IRR): It is the rate that makes the net present value of the project zero.…

Q: A truck can be purchased for $55,000. Annual O&M costs are expected to increase by $1,800 every…

A: It is the optimal maintenance interval or replacement strategy used to determine the best timing for…

Q: Margaret has a project with a $28000 first cost that returns $5000 per year over its 10-year life.…

A: The net present value function or concept can be used to determine the net present value of a future…

Q: 5. Does your company want to purchase this machine that will provide cost savings of $100,000…

A: NPV is also known as Net Present value. It is a capital budgeting technique which helps in decision…

Q: (LG 4.5) Margaret has a project with a $28 000 first cost that returns $5000 per year over its…

A: Future Value: Using an expected rate of growth, future value (FV) is defined as the worth of a…

Q: With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine…

A: Equivalent annual cost:Equivalent annual cost (EAC) is a financial metric used to compare the cost…

Q: is replaced, it has no salvage value. Compute the present equivalent cost of the equipment using 10%…

A: Present Value: It is the present worth of the cash flows discounted at a specific interest rate.…

Q: 3. You could also buy the oven, rather than leasing it. The oven would cost $15,000 initially, plus…

A: To determine whether buying the oven is a better deal than leasing, we need to compare the net…

Q: Acme Company is considering whether to replace an old machine with a new machine. The new machine…

A: Capital budgeting is a strategic financial planning process used by companies to evaluate and…

Q: Compute the capitalized cost of a new car worth P800,000.00 if it is estimated that it requires…

A: New car cost (C) = P 800000 Annual cost (A) = P 20000 Salvage value (S) = P 300000 n = 5 years r =…

Q: 12 Winneconne Company is considering replacing a machine with a book value of P400,000, a remaining…

Q: Alternative X has a first cost of $30,000, an operating cost of $9,000 per year, and a $5,000…

A: The present value of the annuity is the current worth of a cash flow series at a certain rate of…

Question

16. A car costs P800,000, 4 years ago, and the salvage value is P50,000, 6 years from now. If it is to be
replaced by a new one and the trade-in value is #450,000, find the sunk cost if money is worth
12% O

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Concept

VIEW

Answer

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

1. For ABC project, book value of the equipment is estimated to be 500,000 at the end of the project's life, and the market value is expected to be 400,000. Clean up costs are 50,000 and change in working capital is 100,000. Calculate net salvage value assuming a 30% tax rate. Paragraph В I !!
A machine cost is 3000$ and salvage value 850$, if the rate of interest is 9% and number of years are 5 then what willI be the present worth for fixed output condition? Select one: a. 2448$ b. 2418$ c. 2427$
5
021 The Times newspaper is trying to decide between two machines. Machine A costs $80,000 and is expected to last 12 years, with a $14,000 salvage value. The annual maintenance and operating expenses are $4,000 per year. It will require major maintenance in year 5, which costs $2,000. Alternatively, Machine B costs $57,000. This machine will last for only 6 years because of its higher technology and delicate design, and its salvage value is assumed to be $15,000. The annual maintenance and operating are expected to be $8,000 per year. Based on a present worth comparison, which machine should be used using an 8-year study period at an interest rate of 8% per year. And why? Note, assuming the book value as a reasonable estimate for the market value, the book value of machine A in year 8 is $36,000, while the book value of Machine B in year 2 is $43,000.
6. A company is considering two alternatives for manufacturing a certain part. Method R will have a first cost of $40,000, and annual operating cost of $25,000, and a $10,000 salvage value after its five-year life. Method S will have an initial cost of $100,00, an annual operating cost of $15,000 and a $12,000 salvage value after its 10-year life. At an interest rate of 12% per yr, the present worth values of the alternatives are closest to;
Mr Dela Cruz is going to buy a new machine for manufacturing its product: Machine A has a first cost of P50,000; annual maintenance P6,000; life 12 years and salvage value of P2,000. Machine B has a first cost of P140,000; annual maintenance P2,500, life 36 years and salvage value P10,000. Money is worth 9%.Compute the present worth cost of B P156,060 P166,080 P186,070 P154,292
am. 214.
With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equal to that of machine Y at an interest rate of 8% per year. Determine the replacement value. Machine X Machine Y 90,000 Market Value, S -40,000 for year 1,increasing by 2000 per year thereafter. 24,000 Annual Cost, $ per Year -59,500 Salvage Value Life, Years 19,500 The replacement value is $
XYZ company has A piece of new equipment will cost $70,000. The equipment will provide a cost savings of $15,000 per year for ten years, after which it will have a $3,000 salvage value. If the required rate of return is 14%, the equipment's net present value is: a. (8240) b. None of answers are correct c. 9050 d. 23888
21. A machine costs P60,000 and the salvage value is P10,000 after 10 years. Find the book value after 7 years by Straight Line Method. Answer with text and/or attachments:
Alternative X has a first cost of 36000 an annual operating cost of 6900, and a salvage value of 11025 after 13 year. Alternative Y has a first cost of 37000 an annual operating cost of 7000, and a salvage value of 16280 after 13 year. If MARR of 13% per year, approximately what is the PW of each alternative? Select one: O a. PW of X= -77518 and PW of Y= -78067 O b. PW of X= -75990 and PW of Y= -76529 O c. PW of X= -76750 and PW of Y= -77294 O d. PW of X= -78293 and PW of Y= -78848
13. ABC manufacturing wants to purchase a new machine that is expected to save $12,000 in annual operating and maintenance costs for the next five years. The machine's price is $32,000, and the installation cost is $3500. With a salvage value of $5,000 and an interest rate of 17%, what is the discounted payback period? a. 4 years b. 6 уears с. 5 years d. 3 years