McDonald (Agricultural Engineers) Ltd recently built a machine for a farmer at a cost of £22,000. The farmer, however, was recently declared bankrupt and so is unable to take delivery of the machine. Another farmer has offered to buy the machine if certain adaptations are made. These adaptations will require four components, which are held in inventories. The components cost £800 each and are frequently used by the business. The current replacement price per component is £850 and their realisable value is £420 per component. To fit the components, skilled labour, which costs £18 per hour must be used. The job will take 16 hours and it will mean taking two workers off another job. This job could be done by semi-skilled workers, who are paid £12 per hour but have no work available until next week. The business has received an offer from an agricultural supplier to buy the machine in its current condition for £10,000. What is the minimum price at which the business should sell the machine after the adaptations have been made? (Enter an integer.)
McDonald (Agricultural Engineers) Ltd recently built a machine for a farmer at a cost of £22,000. The farmer, however, was recently declared bankrupt and so is unable to take delivery of the machine. Another farmer has offered to buy the machine if certain adaptations are made. These adaptations will require four components, which are held in inventories. The components cost £800 each and are frequently used by the business. The current replacement price per component is £850 and their realisable value is £420 per component. To fit the components, skilled labour, which costs £18 per hour must be used. The job will take 16 hours and it will mean taking two workers off another job. This job could be done by semi-skilled workers, who are paid £12 per hour but have no work available until next week. The business has received an offer from an agricultural supplier to buy the machine in its current condition for £10,000. What is the minimum price at which the business should sell the machine after the adaptations have been made? (Enter an integer.)
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
Related questions
Question
McDonald (Agricultural Engineers) Ltd recently built a machine for a farmer at a cost of
£22,000.
The farmer, however, was recently declared bankrupt and so is unable to take delivery of the machine. Another farmer has offered to buy the machine if certain adaptations are made. These adaptations will require four components, which are held in inventories. The components cost
£800
each and are frequently used by the business. The current replacement price per component is
£850
and their realisable value is
£420
per component.To fit the components, skilled labour, which costs
£18
per hour must be used. The job will take 16 hours and it will mean taking two workers off another job. This job could be done by semi-skilled workers, who are paid
£12
per hour but have no work available until next week.The business has received an offer from an agricultural supplier to buy the machine in its current condition for
£10,000.
What is the minimum price at which the business should sell the machine after the adaptations have been made?
(Enter an integer.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education