A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can bepurchased and installed for $90,000 with $4,500 salvage value after 16 years. The other can be purchased and installed for $110,000with $2,000 salvage value after 16 years. Operation and maintenance for each is expected to be $21,500 and $12,000 per year,respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes.Click here to access the TVM Factor Table CalculatorClick here to access the MACRS-GDS table.Part aDetermine which alternative is less costly, based upon comparison of after-tax annual worth.Show the AW values used to make your decision:Conveyor 1: $Conveyor 2: $Alternative 1

Explanation:To determine which alternative is less costly based on after-tax annual worth, we need…

Answered: A granary has two options for a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $70,000 with $3,000 salvage value after 16 years. The other can be purchased and installed for $110,000 with $4,000 salvage value after 16 years. Operation and maintenance for each is expected to be $18,000 and $14,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a income-tax rate of 25%, and a MARR of 9% after taxes. Solve, a. Determine which alternative is less costly, based upon comparison of after-tax annual worth. b. What must the cost of the second (more expensive) conveyor be for there to be no economic advantage between the two?
A granary purchases a conveyor used in the manufacture of grain for transporting, filling, or emptying. It is purchased and installed for $72,000 with a market value for salvage purposes that decreases at a rate of 20% per year with a minimum of value $2,350. Operation and maintenance is expected to cost $14,400 in the first year, increasing $1,200 per year thereafter. The granary uses a MARR of 15%. What is the optimum replacement interval for the conveyor? ___________ years.
Two alternatives are being considered for recovering aluminum from garbage. Alternative 1 has a capital cost of $100,000 and a first-year maintenance cost of $12,000, with maintenance increasing by $500 per year for each year after the first. Alternative 2 has a capital cost of $140,000 and a first-year maintenance cost of $4000, with maintenance increasing by $1000 per year after the first. Revenues from the sale of aluminum are $20,000 in the first year, increasing $2000 per year for each year after the first. The life of both alternatives is 10 years. There is no salvage value. The before-tax MARR is 4%. Use present worth analysis to determine which alternative is preferred.
Agranary purchases a conveyor used in the manufacture of grain for transporting, filling. or emptying. It is purchased and installed for $80,000 with a market value for salvage purposes that decreases at arate of 20% per year with a minimum of value $1.750, Operation and maintenance is expected to cost $15.000 in the first year, increasing $1.060 per year thereafter. The granary uses a MARR of 15%. What is the optimum replacement interval for the conveyor? years, Click here to access the TVM Factor Table Calculator For calculation purposes, use 5 decimal places as displayed in the factor table provided.
Two methods can be used to produce expansion anchors. Method A costs $70,000 initially and will have a $11,000 salvage value after 3 years. The operating cost with this method will be $22,000 in year 1, increasing by $2600 each year. Method B will have a first cost of $123,000, an operating cost of $8000 in year 1, increasing by $6500 each year, and a $33,000 salvage value after its 3-year life. At an interest rate of 15% per year, which method should be used on the basis of a present worth analysis? The present worth for method A is $ The present worth for method B is $[ Method (Click to select) is used to produce expansion anchors.
Two methods can be used to produce expansion anchors. Method A costs $ 70, 000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $36,000 in year 1, increasing by $3200 each year. Method B will have a first cost of $ 116,000, an operating cost of $10000 in year 1, increasing by $10000 each year, and a $46, 000 salvage value after its 3 year life. At an interest rate of 8% per year, which method should be used on the basis of a present worth analysis?
Two techniques can be used to produce expansion anchors. Technique A costs $90,000 initially and will have a $12,000 salvage value after 3 years. The operating cost with this method will be $33,000 in year 1, increasing by $2600 each year. Technique B will have a first cost of $113,000, an operating cost of $7000 in year 1, increasing by $7000 each year,and a $43,000 salvage value after its 3-year life. At an interest rate of 13% per year, which technique should be used on the basis of a present worth analysis? Notice that there are no revenues. Please work out and do not use excel, however if you use excel please show how to input everything needed down to the formula, thank you!
The Camino Real Landfill was required to install a plastic liner to prevent leachate from migrating into the groundwater. The fill area was 50,000 m2 and the installed liner cost was $8 per m2. In order to recover the investment, the owner charges to unload at the rates of $10 per pick-up, $25 per dumptruck, and $70 per compactor-truck load. The fill area is adequate for 4 years. If the annual traffic is estimated to be 2500 pick-up loads, 650 dumptruck loads, and 1200 compactor-truck loads, what rate of return will the landfill owner make on the investment?
A special purpose machine toolset costs $20,000. The toolset will be financed through a bank loan of $10,000 repayable in two equal annual payments at 10% compounded annually. The toolset is expected to provide annual savings of $30,000 for two years and is to be depreciated by a 3-year MACRS method. This special purpose toolset will require annual O&M maintenance of $5000 per year. The salvage value at the end of two years is expected to be $8,000. Assuming a marginal tax rate of 25% and a MARR of 15% find the following: a) Find yearly depreciation, any annual interest payments, the taxable income for each year, and then calculate the yearly taxes. b) Identify any gain or loss from the salvage of the asset at the end of the 2nd year; calculate any additional taxes or credits for the 2nd year.
Two methods can be used to produce expansion anchors. Method A costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 in year 1, increasing by $4000 each year. Method B will have a first cost of $120,000, an operating cost of $8000 in year 1, increasing by $6500 each year, and a $40,000 salvage value after its 3-year life. At an interest rate of 12% per year, which method should be used on the basis of a present worth analysis?
Crane Lumber, Inc., is considering purchasing a new wood saw that costs $40,000. The saw will generate revenues of $100,000 per year for five years. The cost of materials and labor needed to generate these revenues will total $60,000 per year, and other cash expenses will be $10,000 per year. The machine is expected to sell for $3,900 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Crane’s tax rate is 26 percent, and its opportunity cost of capital is 14.20 percent. What is the project's NPV? (Do not round intermediate calculations. Round final answer to the nearest whole dollar, e.g. 5,275.)
Cullumber Lumber, is considering purchasing a new wood saw that costs $40,000. The saw will generate revenues of $100,000 per year for five yearsThe cost of materials and labor needed to generate these revenues will total $60,000 per yearand other cash expenses will be $10,000 per year. The machine is expected to sell for $2.000 at the end of its fiveyear life and will be depreciated on a straight-line basis over five years to zeroCullumber's tax rate is 26 percentand its opportunity cost of capital is 14.20 percent. What is the project's NPV(Do not round intermediate calculationsRound final answer to decimal places, e.g. 5,275)

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