I have purchased a machine worth P1,622,721.00. And it needs maintenanceat the end of every 6 months starting 5 years after its purchased date andmaintenance will be needed for the next 10 years of its useful life. Themaintenance cost is equivalent to the 2% of the total machine cost. Howmuch money shoukd be prepare today to finance the requirement if theinterest rate is 0,10 compounded quarterly?

In this we need to convert quarterly interest into semiannual interest rate and find out the payment…

Answered: at the end of every 6 months starting 5…

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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Machines that have the following costs are under consideration for a new manufacturing process. Compute the Equivalent Annual Worth with an interest rate of 8%, compounded semiannually. The machine last 4 years. First cost: $40,000 Semiannual Operating cost: $8,970 Semiannual incomes: $14,000 Salvage value: $10,000 a. EAW = $2,285 Ob. EAW = $175 O c. EAW = $1,958 O d. EAW $ 21,745
To maintain a machine the company has to pay 3500$ annually for the 8 years, if the rate of interest is 9% what will be the present worth? Select one: a. 18840$ b. 19843$ c. 19372$
In the choice of mechanical equipment you are required to submit your recommendation as to which of the two steam shovels for earth excavation is better to buy. The basis is 20 year service & interest at 7%. Taxes & insurance are the same in each case: 5% & 1% respectively. Use Annual Cost & CC. 50-ton shovel 70 ton shovel First Cost P30k P38k 20 years 20 years P2k Life Salvage value Annual Operation Annual Upkeep Annual Output P3k P15k P17k P1.5k P2k 150k yards 200k yards
1. Maintenance costs for a small bridge with an expected 50-yr life are estimated to be P 2,000.00 each year for the first 5 years, followed by a P10.000 expenditure in the 15th year and a P 20,000 expenditure in the 25th year. IfI 12% per year, what is the equivalent uniform annual maintenance costs over the entire 50-yr period? a. P 1,230 b. P 852 C. P 936 d. P 1,159
A machine’s first cost is $60,000 with salvage values over the next 5 years of are $50K, $40K, $32K, $25K, and $12K. The annual operating and maintenance costs are the same every year. Determine the machine total cost.
The AW values for retaining a presently owned machine for additional years are shown in the table. Note that the values represent the AW amount for each of the n years that the asset is kept, i.e., if it is kept 5 more years, the annual worth is $−95,000 for each of the 5 years. Assume that future costs remain as estimated for the replacement study and that used machines like the one presently owned will always be available. (a) What is the ESL and associated AW of the defender at a MARR of 12% per year? (b) A challenger with an ESL of 7 years and an AWC = $-88,000 per year has been identified. Which AW will be less for the respective ESL periods? Retention Period, Years AW Value, $ per Year 1 -87,000 2 -93,000 3 -85,000 4 -83,000 5 -95,000 a) The ESL of the defender is_____ year(s) with the lowest AW of $_________ . b) The______________ has the lower AW at _________$ for n equal to ______ .
If a new machine is purchased for OMR 200,000 that has a useful life of 5 years with no residual value and the current cost of the machine after 2 years is OMR 180,000 and transportation charges are OMR 10,000 then what would be the realizable value of the machine? a. OMR 170,000 b. OMR 180,000 c. OMR 160,000 d. OMR 186,000
A research laboratory which requires P5M for original construction; P100T at the end of every year for the first 6 years and then P120T each year thereafter for operating expenses, and P500T every 5 years for replacement of equipment with interest at 12% per annum. What is the cost of perpetual operation? a. P917,740 b. P977,140 c. P719,740 d. P717,940
Show the complete solution. Do not used Excel. Use manual method/handwritten The maintenance costs of a new boiler are estimated as follows: P 600 per year for the first 3 years, P X at the 4th year, and P 1,800 per year starting at the 5th year up to the end of its 10 - year life. If the future value of all the maintenance is P 20,000, find the value of X. Money is 6% compounded annually.
The net present value of the cost of operating a machine for the next five years is R8 947. The discount rate used by the company for investment appraisal is 9% Required What is the equivalent annual cost, and the present value of the cost in perpetuity of operating this machine? (Use discount factors to three decimal places) a. Equivalent annual cost: R92 825.56; cost in perpetuity: R9 283 b. Equivalent annual cost: R2 300; cost in perpetuity: R25 555.56 c. Equivalent annual cost: R2 000; cost in perpetuity: R20 000.00 d. Equivalent annual cost: R9 283; cost in perpetuity: R92 825.56
The Owner of Blue Bayou Café usually pays his appliance (refrigerators, dish washers, and freezers) maintenance contract by the year. If he projects the annual costs shown, find the equivalent A value for years 1 through 5. Year Cash Flow, $/Year Estimated i Per Year 0 0 1– 3 5000 10% 4– 5 7000 12%
At i = 10% per year, a machine has a first cost of $9,000 and estimated operating costs and year-end salvage values as shown. The annual equivalent cost if you operate the machine for 3 years is closest to which value? Operating Salvage Cost, $ Value, $ 7000 Year -1000 -1200 5000 -1500 4200 -2000 3000 -3000 2000 O-$-3,568 = $-3,770 -1500 4200 -2000 3000 -3000 2000 O =$-3,568 O = $-3,770 = 2-3,636 %3D O =$-3,454 O = $-3,832 123 n 345

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at the end of every 6 months starting 5 years after its purchased d. maintenance will be needed for the next 10 years of its useful life. maintenance cost is equivalent to the 26 of the total machine cost much money should ha'nireniare tadavto financh minre the ont