Esquire comp need to acquire a molding machine to be used in its manufacturing process.2 types of machine would be appropriate. Machine A purchase for $48000. It will last 10 Yrs, require maintenance of $1000 per yr.after 10yrs the machine can be sold for $5000. Machine B purchase for $40000. It will last 10yrs and will require maintenance of $4000 in year 3, $5000 in yr 6, $6000 in yr 8. After 10 yrs the machine will have no salvage value. Assume interest rate at 8%,and maintenance cost are paid at the end of each year. Ignore income tax consideration. Use appropriate table factors. Calculate the present value of machine A and B.
Esquire comp need to acquire a molding machine to be used in its manufacturing process.2 types of machine would be appropriate. Machine A purchase for $48000. It will last 10 Yrs, require maintenance of $1000 per yr.after 10yrs the machine can be sold for $5000. Machine B purchase for $40000. It will last 10yrs and will require maintenance of $4000 in year 3, $5000 in yr 6, $6000 in yr 8. After 10 yrs the machine will have no salvage value. Assume interest rate at 8%,and maintenance cost are paid at the end of each year. Ignore income tax consideration. Use appropriate table factors. Calculate the present value of machine A and B.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Esquire comp need to acquire a molding machine to be used in its manufacturing process.2 types of machine would be appropriate. Machine A purchase for $48000. It will last 10 Yrs, require maintenance of $1000 per yr.after 10yrs the machine can be sold for $5000. Machine B purchase for $40000. It will last 10yrs and will require maintenance of $4000 in year 3, $5000 in yr 6, $6000 in yr 8. After 10 yrs the machine will have no salvage value. Assume interest rate at 8%,and maintenance cost are paid at the end of each year. Ignore income tax consideration. Use appropriate table factors. Calculate the present value of machine A and B.
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