D-75 Specialized bits (costing $50,000) used in the miningindustry have a useful life of 5000 hours of operationand can be traded in when a new bit is purchased for10% of first cost. The drilling machine that uses thebit is used 1000 hours per year. What is the equiva-lent uniform annual cost of these bits at 2.5%?(a) $8559(b) $9510(c) $9828(d) $10,920

Answered: Image /qna-images/answer/6787cb17-a178-4974-8fb2-94c89c07a3a8.jpg

Answered: of first cost. The drilling machine…

of first cost. The drilling machine that uses the bit is used 1000 hours per year. What is the equiva- lent uniform annual cost of these bits at 2.5%? (a) $8559 (b) $9510 (c) $9828

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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Question

D-75 Specialized bits (costing $50,000) used in the mining
industry have a useful life of 5000 hours of operation
and can be traded in when a new bit is purchased for
10% of first cost. The drilling machine that uses the
bit is used 1000 hours per year. What is the equiva-
lent uniform annual cost of these bits at 2.5%?
(a) $8559
(b) $9510
(c) $9828
(d) $10,920

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