Exercise 2:Compare the machines shown on the basis of their capitalized costs and an interest rate of 10% per year todetermine which of these mutually exclusive alternatives is economically the best.Мachine AМachine BFirst cost200,00040,000 in year 1 and increasing by1,000 until year 825,000800,000Annual operating cost12,000Salvage value1,000,000Life in years8.

Given, Firstly consider the Machine A Initial cost (C) = 200000 Salvage (S) = 25000 Maintenance…

Compare the machines shown on the basis of their capitalized costs and an interest rate of 10% per year to determine which of these mutually exclusive alternatives is economically the best. Machine A Machine B 200,000 40,000 in year 1 and increasing by 1,000 until year 8 25,000 First cost 800,000 Annual operating cost 12,000 Salvage value 1,000,000 Life in years 8 00

Compare the machines shown on the basis of their capitalized costs and an interest rate of 10% per year to determine which of these mutually exclusive alternatives is economically the best. Machine A Machine B 200,000 40,000 in year 1 and increasing by 1,000 until year 8 25,000 First cost 800,000 Annual operating cost 12,000 Salvage value 1,000,000 Life in years 8 00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

hi, could u explain how to solve plan B thx
expense of $500. Consider a yearly Two machines are evaluated for a new project, consider a yearly interest rate of 6% and the information described in the following table. Determine EUAC for both alternatives and determine the best option. Purchase cost Salvage value Duration Machine A Machine B $10,000 $15,000 $1,250 $1,950 5 years 10 years 11 13 L
Compare three alternatives on the basis of their capitalized costs at /= 8% per year and select the best alternative. Alternative E F G $-460,000 $-30,000 $90,000 4 First Cost AOC, per Year Salvage Value Life, Years $-80,000 $-65,000 $40,000 2 The capitalized cost of alternative E is $ The best alternative is (Click to select) ▼ alternative F is $ $-960,000 $-3,000 $450,000 ∞0 and alternative G is $
The following three alternatives have been developed and costed to improve the efficiency of aircraft engines. Compare the alternatives using capitalized cost and a MARR of 10% per year compounded annually. Alternative Alternative Alternative G First Cost, $ -1,000,000 -3,000,000 -5,000,000 Net income $ per year 325 000 400,000 600,000 Salvage value, S 50,000 70,000 Life, years 4 8.
Compare the machines below using present worth analysis at i10% per year and find which one should be selected Machine Y First Cost Operating Cost Savage Lfe cycle Machine X 20.000 3.000 3.000 3years Firat Cost 30.000 .000 Annuel Operating Cost Salvage Life cycle 3.000 6 yoars
Q1: For the machines indicated below. Consider i= 10% per year First cost Annual cost Salvage value Life duration Machine A 20,000 $ 5,000 $ 7,500 $ 3 Machine B 25,000 4,000 6,000 4 A- Draw cash flow diagram for each machine for one cycle of each project B- Draw cash flow diagram for each project considering the LCM life cycle (Hint: different project duration, need to have the LCM life cycle) C- Compare the machines to select best alternative one based on Present worth analysis method D- Repeat part B considering Future worth analysis
Required information A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $ Equipment replacement cost in year 2, $ Annual operating cost, $/year Salvage value, $ Life, years -880,000 -300,000 -930,000 250,000 14 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors The equivalent annual cost of the project is $- 980,731.95
What is the annual equivalent cost of purchasing a lift truck that has an initial cost of $85,000, an annual operating cost of $13,500, and an estimated salvage value of $23,000 after six years of use at an annual interest rate of 6%? X More Info Equal Payment Series Single Payment Compound Present Amount Worth Compound Amount Factor (F/A, I, N) Sinking Present Fund Worth Factor Factor Capital Recovery Factor (A/P, i, N) Factor Factor (F/P, i, N) (P/F, i, N) (A/F, i, N) (P/A, i, N) 1.0800 0.9434 1.0000 1.0000 0.9434 1.0800 1.1238 0.8900 2.0800 0.4854 1.8334 0.5454 1.1910 0.8396 3.1836 0.3141 2.6730 0.3741 1.2625 0.7921 4.3746 0.2288 3.4861 0.2886 1.3382 0.7473 5.6371 0.1774 4.2124 0.2374 1.4185 0.7050 6.9753 0.1434 4.9173 0.2034 0.6851 8.3938 0.1191 5.5824 0.1791 1.5038 1.5938 1.6895 0.6274 9.8975 0.1010 6.2098 0.1610 0.5919 11.4913 0.0870 6.8017 0.1470 1.7908 0.5584 13.1808 0.0759 7.3801 0.1359 SAWNIN 1 2 3 4 5 67899 10
You are considering the following project. What is the NPV of the project? WACC of the project: 0.10 Revenue growth rate: 0.05 Tax rate: 0.40 Revenue for year 1: 13,000 Fixed costs for year 1: 3,000 variable costs (% of revenue): 0.30 project life: 3 years Economic life of equipment: 3 years Cost of equipment: 20,000 Salvage value of equipment: 4,000 Initial investment in net working capital: 2,000
Use Service-Output Method. A Machine costs ₱80,000 and an estimated life of 10 years with a salvage value of ₱5,000. Assuming that the total service of the machine is 1,497,600 hours and the number of working days per year is 260 days. What is the book value after 4 years if the machine production time a is 24 hours? Answer: BV4 = P 78,750.00Show Solution
Given the following table for two alternatives. consider that the interest rate = 10% Alternative A B First cost, $ -90,000 -750,000 AOC, $/year -50,000 -10,000 Salvage value, $ Life, years 8,000 2,000,000 00 All of the following equations for calculating the capitalized cost of alternative B are correct, except: Select one: = -750,000 – 10,000/0.10 a. + 2,000,000/(1+0.10) b. = [-750,000(0.10) – 10,000]/0.10 c. capitalized cost = -750,000 – 10,000/0.10 + 2000000 (0.10) d. capitalized cost = -750,000 – 10,000/0.10
Required: If ABC requires has a cost of capital (discount rate) of 10%, How much is the equivalent annual cost of Model Y