A company, XYZ, bought a machine for BD 250,000 which has a useful life of 10 years and can be sold for BD50,000 at the end of its useful life. In addition, the cost of installing the machine is BD25,000 while the cost of dismantling is BD 7,500. Determine the book value at the end of 8th year using sinking fund if interest is 12%.

A company, XYZ, bought a machine for BD 250,000 which has a useful life of 10 years and can be sold for BD50,000 at the end of its useful life. In addition, the cost of installing the machine is BD25,000 while the cost of dismantling is BD 7,500. Determine the book value at the end of 8th year using sinking fund if interest is 12%.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Pads Corp. is contemplating the purchase of a large stamping machine which will cost Php 500,000. With additional transportation and installation costs of Php 40,000 and 65,000. Its market value the end of 5 years is estimated at Php 75,000. What is the accumulated depreciation at the end of year 4 using, (a) declining balance method? (b) sum of the years method? (c) sinking fund method (9%)? Round off your answers to the nearest 2 decimal places.
(b) Suppose that a machine costing $9000.00 is to be replaced at the end of 7 years, at which time it will have a salvage value of $900.00. In order to provide money at that time for a new machine costing the same amount, a sinking fund is set up. The amount in the fund at the end of 8 years is to be the difference between the replacement cost and the salvage value. If equal payments are placed in the fund at the end of each quarter and the fund earns 8% compounded quarterly, what should each payment be?
Please solve and explain! indicate your final answer!
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A bridge that was constructed at a cost of P 7.5 M, is expected to last 30 years at the end of which time its renewal cost will be P 4 M. Annual repairs and maintenance is P 300,000. What is the capitalized cost of the bridge at an interest of 6%?
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