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 P38k 20 years P3k First Cost Life Salvage value Annual Operation Annual Upkeep Annual Output P30k 20 years P2k P15k P1.5k 150k yards P17k P2k 200k yards

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 P38k 20 years P3k First Cost Life Salvage value Annual Operation Annual Upkeep Annual Output P30k 20 years P2k P15k P1.5k 150k yards P17k P2k 200k yards

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

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

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