A recapping plant is planning to acquire a new diesel generating set to replace its present unit which they run during brown outs. The new set would cost ₱135,000with a five year life, and no estimated salvage value. Variable cost would be ₱150,000 a year. The present generating set has a book value of ₱75,000 and a remaining life of 5 years its disposal value now is ₱7,500 but it would be zero after 5 years. Variable operating cost would be 187,500 a year. Money is worth 10% Which is profitable, to buy the new generator set or retain the preent set? Support your answer by showing your computation.
A recapping plant is planning to acquire a new diesel generating set to replace its present unit which they run during brown outs. The new set would cost ₱135,000with a five year life, and no estimated salvage value. Variable cost would be ₱150,000 a year. The present generating set has a book value of ₱75,000 and a remaining life of 5 years its disposal value now is ₱7,500 but it would be zero after 5 years. Variable operating cost would be 187,500 a year. Money is worth 10% Which is profitable, to buy the new generator set or retain the preent set? Support your answer by showing your computation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
A recapping plant is planning to acquire a new diesel generating set to replace its present unit
which they run during brown outs. The new set would cost ₱135,000with a five year life, and no
estimated salvage value. Variable cost would be ₱150,000 a year.
The present generating set has a book value of ₱75,000 and a remaining life of 5 years
its disposal value now is ₱7,500 but it would be zero after 5 years. Variable operating cost
would be 187,500 a year. Money is worth 10%
Which is profitable, to buy the new generator set or retain the preent set? Support your
answer by showing your computation.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education