A refrigeration equipment fabricator sold and ice drop making machine with the condition that in case the machine will not be able to produce theguaranteed capacity, he will deduct from the agreed price of the machine the loss of revenue that the buyer will incur during the economic life of themachine which is set at 5 years, plus 12% cost of money. One month after the machine was delivered, the buyer complained to the fabricator that heis not getting the guaranteed production. After a series of tests, it was determined that the buyer would be losing P4,000 worth of unrealized sales peryear. Assuming no increase in operation cost if guaranteed production were attained, how much must the buyer deduct from the agreed price of themachine? Neglecting the one month deduct.O P 12,000.00O P15,000.89O P 14,419.10O P16,657.90

The time value of money (TVM) signifies that a sum of money is worth more now than the same sum of…

Answered: A refrigeration equipment guaranteed…

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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Sooky has a spotter truck with a book value of $46,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero-salvage value. iSooky can purchase a new spotter truck for $126,000 and receive $31,600 in return for trading in its old spotter truck. The old spotter truck has variable manufacturing costs of $81,000 per year. The new spotter truck will reduce variable manufacturing costs by $25,600 per year over the five-year life of the new spotter truck. The total increase or decrease in income by replacing the current spotter truck with the new truck is:
c) The production department of Y Company is planning to purchase a new machine to improve product quality. The company's management accountant is currently evaluating two options- Buy the machine OR Rent it. Following information is available: The company has to pay £3,200 to set up the machine. Insurance cost £450 per annum. If it is bought, the new machine is depreciated on reducing balance basis at the rate of 25%. After various calculations, the company has to pay £4,200 maintenance cost every year and estimated repair cost would be £300 per year. The firm will have to sell old machines, which had cost £65,000 six years ago. Apart from the above information, the £500 of delivery cost is incurred for this purchase option. If it is rented, £ 4,650 per year to pay as rent. There is no cost for repair and maintenance. However, the firm is required to pay the administration charge of £650 with this rent option. For rent option, the delivery cost remains at 20% of the £ 500 (the…
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None
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Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

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