**Problem D-75**Specialized bits, costing $50,000, are used in the mining industry. These bits have a useful life of 5000 hours of operation and can be traded in when a new bit is purchased for 10% of the initial cost. The drilling machine that uses the bit operates for 1000 hours per year. Determine the equivalent uniform annual cost of these bits, given an interest rate of 2.5%.Options:(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

**Problem D-75**

Specialized bits, costing $50,000, are used in the mining industry. These bits have a useful life of 5000 hours of operation and can be traded in when a new bit is purchased for 10% of the initial cost. The drilling machine that uses the bit operates for 1000 hours per year. Determine the equivalent uniform annual cost of these bits, given an interest rate of 2.5%.

Options:
(a) $8559
(b) $9510
(c) $9828
(d) $10,920

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