Power to a remote transmitting station is provided by a Diesel-electric generator unit. The original cost of the unit is P65,000. It cost P2,000 to ship the unit to the job site. An additional cost of P3,000 was incurred for installation with an expected life of 10 years and salvage value of P5,000. Determine the annual depreciation cost by SFM at 5% interest rate.

Power to a remote transmitting station is provided by a Diesel-electric generator unit. The original cost of the unit is P65,000. It cost P2,000 to ship the unit to the job site. An additional cost of P3,000 was incurred for installation with an expected life of 10 years and salvage value of P5,000. Determine the annual depreciation cost by SFM at 5% interest rate.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

1. Xavier Company contracted for the purchase and installation of a large printer which costs P250,000. This amount includes freight and installation charges estimated at 10% of the above contract price. If the printer shall be depreciated over a period of 10 years with a salvage value of P15,000 and money is worth 6% per annum, what is the annual depreciation charge using SFM? A. P19,725.67 B. P19,257.50 C. P17,070.29 D. P17,828.97
An asset costing P50,000 has a life expectancy of 6 years and a estimated salvage value of P8,000. Calculate the depreciation charge at the end of the fourth period using fixed percentage method. O P7,144.2 O P5,263.86 O P3,878.4 P5,465.75 OP5,865.75
A firm can purchase a centrifugal separator (5-year MACRS property) for $22,000. The estimated salvage value is $4,000 after a useful life of six years. Operating and maintenance (O&M) costs for the first year are expected to be $2,200. These O&M costs are projected to increase by $1,000 per year each year thereafter. The income tax rate is 24% and the MARR is 11% after taxes. What must the uniform annual benefits be for the purchase of the centrifugal separator to be economical on an after-tax basis?
2. A machine, initially costing Php 1.39 M, is set to depreciate Php 170,000 every year using sinking fund method. How much must be invested every year to replace the asset with a better but more expensive machine costing Php 243,000 after 6 years at an annual rate of 6%?
A vehicle include annual labor cost of $60,000 and annual revenue of $150,000. Using a service life of 10 years, determine the BTCF and ATCF at 21% federal and 6.5% state tax rate. Would you invest in your vehicle? (Establish and use your own MARR for PW, AW and ROR analysis)
An industrial plant bought a generator set for P90,000. Other expenses including installation amounted to P10,000. The generator set is to have a life of 17 years with a salvage value at the end of life of P5,000. Determine the depreciation charge during the 13th year and the book value at the end of 13 years using the (a) declining balance method (b) double declining balance method (c) sinking fund method at 12% interest
A concrete and rock crusher for demolition work has been purchased for $50,000, and it has an estimated SV of $12,000 at the end of its five year life Engineers have estimated that the following units of production (in m³ of crushed material) will be contracted over the next five years. Using the units of production depreciation method, what is the depreciation allowance in year three, and what is the BV at the end of year two? The depreciation allowance in year three is $ The BV at the end of year two is $. (Round to the nearest dollar) (Round to the nearest dollar) EOY m³ 1 14,000 2 26,000 3 35,000 4 17,000 5 8,000
Switch 10 Light Mode Depreciation is not a cash flow. (True or False) Uncle Mort's company is considering production of a new product. The sales price would be $10.25 per unit. The cost of the equipment is $100,000. Operating and Maintenance costs are expected to be $3,500 annually. Based on a 7 -year planning horizon and a MARR of 12%, determine the number of units that must be sold annually to achieve break-even.
Kolby's Korndogs is looking at a new sausage system with an installed cost of $670,000. The asset qualifies for 100 percent bonus depreciation and can be scrapped for $88,000 at the end of the project's 5-year life. The sausage system will save the firm $213,000 per year in pretax operating costs, and the system requires an initial investment in net working capital of $41,000. If the tax rate is 23 percent and the discount rate is 11 percent, what is the NPV of this project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV
A chemical plant worth P 110M has an estimated life of 6 years and a projected scrap value of P 10M. after 3 years of operation an explosion made it a total loss. How much money would have to be raised to put up a new plant costing P 150M, if depreciation reserved had been maintained during its 3 years of operation by Straight Line method?
Twelve years ago, an industrial facility bought a boring machine for P65,000. The estimated life of this machine is25 years and a depreciation reserve had been placed based on this. The price of the latest model is P125,000 andthe facility owner wants to replace the machine with this latest model. The old unit can be sold for P18,000. Howmuch new capital will be required for the purchase?
Air handling equipment that costs P12, 000 has a life of eight years with a P2, 000 salvage value. What is the Sinking fund depreciation amount for each year? Assume interest at 4.5% compounded annually.