Problem 05.040 Capitalized CostCompare three alternatives on the basis of their capitalized costs at i= 9% per year and select the best alternative.AlternativeFirst CostAOC, per YearSalvage ValueLife, YearsEG$-75,000$-80,000$28,000$-385,000$-22,000$78,000$-885,000$-8,000$400,0004.00The capitalized cost of alternative E is $alternative F is $and alternative G is $The best alternative is (Click to select)

Calculation of capitalized cost are as follows

Problem 05.040 Capitalized Cost Compare three alternatives on the basis of their capitalized costs at i= 9% per year and select the best alternative. Alternative E First Cost AOC, per Year Salvage Value Life, Years $-75,000 $-80,000 $28,000 $-385,000 $-22,000 $78,000 G इ885,000 $-8,000 $400,000 4 00 The capitalized cost of alternative E is $ alternative F is $ and alternative G is $ The best alternative is (Click to select)

Problem 05.040 Capitalized Cost Compare three alternatives on the basis of their capitalized costs at i= 9% per year and select the best alternative. Alternative E First Cost AOC, per Year Salvage Value Life, Years $-75,000 $-80,000 $28,000 $-385,000 $-22,000 $78,000 G इ885,000 $-8,000 $400,000 4 00 The capitalized cost of alternative E is $ alternative F is $ and alternative G is $ The best alternative is (Click to select)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: View Policies Current Attempt in Progress A project that cost $63000 has a useful life of 5 years…

Q: When comparıng the two machines shown below using Capital Recovery method if MARR is 8%? What is the…

A: capital cost recovery can be calculated by using this equation Capital recovery cost =First…

Q: Should you replace the Defender? MARR: 12% ❑ Given: Defender Market price: $100,000 Remaining…

A: The NPV is the tool that can help find the feasibility of the replacement of one piece of equipment…

Q: Cost of the investment $ 32,000 Annual cost savings $ 9,000 Estimated salvage value $ 3,000…

A: NET PRESENT VALUE Net Present Value is one of the Important Capital Budgeting Techniques. Net…

Q: For the below ME alternatives, which machine should be selected based on the AW analysis. MARR-10%…

A: Machine B : AW = 10484.65

Q: The initial cost of the equipment is closest to: Multiple Choice $360100 $200,760 $211110 Cannot be…

A: It is the duration for which benefits in the form of money would arise to any enterprise for owning…

Q: You are given the following cash flow information for Project A: Year 0 PV Outflows TV Inflows…

A: MIRR is used to determine the attractiveness of a project. It considers the concept of IRR as it is…

Q: Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has…

A: Payback Period: It represents the period in which the initial investment of a project is recovered.…

Q: Compare the alternatives below on the basis of their capitalized costs with adjustments made for…

A: Capitalized cost Capitalized cost refers to expenses that are summed to the cost basis of a fixed…

Q: You have been asked to evaluate two alternatives, X and Y. that may increase plant capacity for…

A: The present value of a project is the current worth of its future cash flows, discounted at a…

Q: Compare the alternatives shown on the basis of their capitalized costs using a MARR of 10% per year.…

A: The capitalized-equivalent-worth approach, also known as Capitalized Cost (CC) Analysis, determines…

Q: Determine the capitalized cost of an alternative that has a first cost of $55,000 an annual…

A: Since multiple question is asked by you so we will solve the 1st question for you. If you want any…

Q: The net present value of the proposed investment

A: Net Present Value (NPV) is a method of capital budgeting which helps to measure the profitability…

Q: Given the data in the table below, choose the better alternative using net present value (NPV)…

A: The question is related to Capital Budgeting. The Net Present Value is calculated with the help of…

Q: Abandonment Value Problem Required Return is IN 000's 10% NORMAL YEAR 0 CASH FLOW (8,800) ABANDONENT…

A: Net present value (NPV) is the difference between the present value of cash inflows and the present…

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Problem 05.040 Capitalized Cost
Compare three alternatives on the basis of their capitalized costs at i= 9% per year and select the best alternative.
Alternative
First Cost
AOC, per Year
Salvage Value
Life, Years
E
G
$-75,000
$-80,000
$28,000
$-385,000
$-22,000
$78,000
$-885,000
$-8,000
$400,000
4.
00
The capitalized cost of alternative E is $
alternative F is $
and alternative G is $
The best alternative is (Click to select)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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

I need typing clear urjent no chatgpt use i will give 5 upvotes
please help me
man.1
4. A company is considering one of the following 3 mutually exclusive alternatives. Project Initial Investment operating Cost per year Revenue per year Salvage value Life (years) A B $63,000.00 $61,000.00 $15,000.00 $11,000.00 $38,000.00 $26,000.00 $12,000.00 $17,500.00 6 4 C $85,000.00 $13,000.00 $35,000.00 $16,000.00 12 If the company uses a MARR of 8%, which of the alternatives will they select using Present Worth Analysis?
Using (incremental) benefit-cost ratio analysis OR (incremental) internal rate of return, determine which of the following three mutually exclusive alternatives should be selected. Each alternative has a 6-year useful life. Assume the MARR is 6%. First Cost Uniform Annual Benefit Salvage Value $560 $140 $40 A $340 $100 0 B $125 $40 0 C
Saved Help Save & Prairie Corporation has provided the following information for a proposed investment project: Discount rate 10% Life of the project 4 years Initial investment cost $23,775 Annual cost savings 7,500 Salvage value 1,500 What is the net present value of the proposed investment project? (Select the answer that is closest to your calculations.) Present value tables are provided below. Present Value of $1 Table (Exhibit 11B-1) (Partial table) Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.855 0.823 0.792 0.763 0.735 0.708 0.683 0.659 0.636 0.613 0.592 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 4. 0.790 0.746 0.705 0.666 0.630 0.596 0.564 0.535 0.507 0.480 0.456 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.731 0.677 0.627 0.582 0.540…
Should WLW lease or construct their own production facilityOption 1: ConstructCosts to incur:Buying land, construct building and getting ready for use$ 360,000Taxes, insurance, and repairs (per year)$ 34,000Intended years of use20Projected market value in 20 years$ 1,600,000Maximum down payment WLW can make$ 500,000Remainder in four payments of;$ 160,000Revenue opportunityBuilding annex will be leased to a tenant and will generate a lease revenue (per year) for 10 years$60,000Option 2: LeaseIntended years of use20First lease payment due now$ 90,000Rest of the lease payments (years 2-20)$ 90,000Operating costs to be paid by WLWRepairs (annual)$ 9,000Maintenance (annual)$ 26,000Initial one-time deposit, will be returned in year 20$ 40,000Required rate of return15%Methodology:The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction.Based on the analysis, they will recommend the preferred option (construction or leasing).
a- At 10%, find PW for the following Table Warehouse cost equipment cost Installation cost Annual maintenance costs Annual Revenues Salvage Machine life 0 1 2 3 -90,000 b- A project with an IRR = 20%, it has the following NCF (S) X X 4000 (SUS) 50,000 46.000 Find X? 6,500 8,000 45,000 15,000 15 years
Compare three alternatives on the basis of their capitalized costs at i = 13% per year and select the best alternative. Alternative E F G First Cost $-85,000 $-325,000 $-825,000 AOC, per Year $-65,000 $-20,000 $-6,000 Salvage Value $25,000 $75,000 $500,000 Life, Years 2 4 ∞ The capitalized cost of alternative E is $ , alternative F is $ , and alternative G is $ . The best alternative is E G F .
Consider a project with a life of 3 years with the following information: initial fixed asset investment = salvage value; price = $35; variable costs $13; fixed costs = $112,000; quantity sold = 53,760 units; tax rate = 23 percent. How sensitive is OCF to changes in quantity sold? $320,000; straight-line depreciation to zero over the 3-year life; zero Multiple Choice $21.85 $0.06 $19.31