Machinery was purchased for Php 5,000,000 with an estimated workinghours or machine hours of about 25,000 hours. The expected scrapvalue is Php 200,000 and the estimated machine-hours for 10 years areas follow:YearMachine Hoursper year1 -34 - 6300026007-10800You are required to calculate the annual depreciation under themachine-hours method.

Depreciation is the reduction in the value of assets that are being used and depreciation depends on…

Php 5,000,000 with an estimated s or machine hours of about 25,000 hours. The expecte e is Php 200,000 and the estimated machine-hours for 10 y ollow: Year Machine Hours per year 1 -3 3000 4 -6 2600 7-10 800

Php 5,000,000 with an estimated s or machine hours of about 25,000 hours. The expecte e is Php 200,000 and the estimated machine-hours for 10 y ollow: Year Machine Hours per year 1 -3 3000 4 -6 2600 7-10 800

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

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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

Machinery was purchased for Php 5,000,000 with an estimated working
hours or machine hours of about 25,000 hours. The expected scrap
value is Php 200,000 and the estimated machine-hours for 10 years are
as follow:
Year
Machine Hours
per year
1 -3
4 - 6
3000
2600
7-10
800
You are required to calculate the annual depreciation under the
machine-hours method.

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Compute the annual-equivalence amount for the following cash flow series at i = 12% $1.600 S1.600 $800 SH00 S800 $500 $500 $1.000 You invest in a piece of equipment costing $50,000. The equipment will be used for two years, and it will be worth $20,000 at the end of three years. The machine will be used for 4,000 hours during the first year, 6,000 hours during the second year, and 5,000 hours during the third year. The expected savings associated with the use of the piece of equipment will be $28,000 during the first year, $40,000 during the second year, and $35,000 during the third year. Your interest rate is 12%. (a) What is the capital recovery cost? (b) What is the annual equivalent worth? (c) What is net savings generated per machine-hour?
Compare processes A and B using Equivalent Uniform Annual Cost (EUAC), assuming an interest rate of 4%. Please show your calculations using factor notation (for example (P/A, i, n)).
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E2
Rr.3.
C12. A contractor gets revenue of $30,000 every year on the below earthmoving contract. Buy a heavy-duty truck for $35,000, salvage is expected to be $3000 at the end of the vehicle’s 5-year MACRS depreciable life. Maintenance is $1000/year, monthly operating expenses are $1000. Is it worth signing the contract? Justify. The expected RoR is 9%.
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