Mr.Andi plans to purchase a new printing machine. He has already received the offering from two printing vendors with the detailed quotation below. Vendor-1 Vendor-2 23.000.000 Initial Cost (IDR) Operation and Maintenance cost, (IDR/year) Salvage value (IDR) Life (years) -20.000.000 -8.500.000 1.000.000 6 -8.100.000 2.000.000 Assuming that Mr.Andi considers the MARR 10% per year, the business is expected to be eighteen years in service: (a) Based on a basis PW calculation, determine which vendor is expected to be considered by Mr.Andi. (b) All printing machines have a lifetime limitation of five years. Considering this situation, Mr. Andi has a standard practice of evaluating all options in line with that period. Assume that the salvage values are not expected to change, and If Mr.Andi uses a study period as exactly that period, which vendor should be chosen by Mr.Andi?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
J 7
Mr.Andi plans to purchase a new printing machine. He has already received the offering from two printing vendors with the detailed quotation below.
Vendor-1
Vendor-2
-20.000.000
-23.000.000
Initial Cost (IDR)
Operation and Maintenance cost, (IDR/year)
Salvage value (IDR)
Life (years)
-8.500.000
1.000.000
6
Assuming that Mr.Andi considers the MARR 10% per year, the business is expected to be eighteen years in service:
(a) Based on a basis PW calculation, determine which vendor is expected to be considered by Mr.Andi.
-8.100.000
2.000.000
19
(b) All printing machines have a lifetime limitation of five years. Considering this situation, Mr. Andi has a standard practice of evaluating all options in line with that period. Assume that
the salvage values are not expected to change, and If Mr.Andi uses a study period as exactly that period, which vendor should be chosen by Mr.Andi?
Transcribed Image Text:Mr.Andi plans to purchase a new printing machine. He has already received the offering from two printing vendors with the detailed quotation below. Vendor-1 Vendor-2 -20.000.000 -23.000.000 Initial Cost (IDR) Operation and Maintenance cost, (IDR/year) Salvage value (IDR) Life (years) -8.500.000 1.000.000 6 Assuming that Mr.Andi considers the MARR 10% per year, the business is expected to be eighteen years in service: (a) Based on a basis PW calculation, determine which vendor is expected to be considered by Mr.Andi. -8.100.000 2.000.000 19 (b) All printing machines have a lifetime limitation of five years. Considering this situation, Mr. Andi has a standard practice of evaluating all options in line with that period. Assume that the salvage values are not expected to change, and If Mr.Andi uses a study period as exactly that period, which vendor should be chosen by Mr.Andi?
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Capital Gains and Losses
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education