The maintenance foreman of a plant in reviewing his records found that maintenance costs on a large press hadincreased with sales of a product that will decline in the future.YearMaintenance Amount4 years ago $5503 years ago $6502 years ago $750Last year$850He believes that maintenance will be $950 this year and will decrease by $50 yearly for 4 years. Assume interest isat 7%. What will be the equivalent uniform annual maintenance cost for the 9-year period?What is the value of the arithmetic gradient (G) representing the increasing maintenance costs over the past fouryears?What is the expected value of the arithmetic gradient (G) representing the decreasing maintenance costs over thefuture four years?

Step 1:Give data:4 years ago: $5503 years ago: $6502 years ago: $750Last year: $850Also, he believes…

Answered: The maintenance foreman of a plant in…

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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A three-year-old small crane is being considered for early replacement. Its current market value is $17,500. Estimated future market values and annual operating costs for the next five years are given in the table below. What is the economic life for this crane if the interest rate is 5.1% per year? Year 0 Market Value Annual Operating Cost $17,500 1 $15,110 $4,700 2 $12,930 $4,809 3 $10,110 $4,883 4 $7,400 $4,997 5 $- $5,095
Excluding maintenance, all other costs from operating the equipment will be $270 per year. Maintenance costs will be $100 in the first year of operation. As the equipment gets older, some parts will need to be replaced and the replacement will cost an additional $30 each year from year 2 to year 5 what is maintenance costs each year (from year 1 to year 5). ...
am. 117.
A supermarket can purchase an automated checkout machine for $100,000 (to be paid in year 0) that has an estimated life of 5 years. Servicing and maintenance over that period will begin at $2,500 per annum ( at the end of year 1) and increase at a 10% rate every year. If the checkout machine is purchased, the supermarket will not be required to hire one additional checkout operator. The checkout operator costs $28,000 per year (assume this is also at the end of each year beginning with year 1), and this amount is expected to increase at 5% annually. If the supermarket’s cost of capital is 10%, which alternative should be selected. Assume all annual cashflows occur at the end of each year.
The cost for manufacturing a component used in intelligent interface converters was $23,000 the first year. The company expects the cost to increase by 2% each year. Calculate the present worth of this cost over a five-year period at an interest rate of 10% per year.
A machine cost P20,000 today and has an estimated scrap value of P2,000 after 8 years. Inflation is 2% per year. The effective annual interest rate earned on money invested is 8%. How much money needs to be set aside each year to replace the machine with an identical model 8 years from now?
The operating and maintenance expenses for a mining machine are expected to be $11000 in the first year and increase by $700 per year during the 25-year life of the machine. What uniform series of payments would cover these expenses over the life of the machine? Interest is 10%/year compounded annually. $4
Desk company has a product that it currently sales in the market for $50 per unit. Desk has develop in new feature that, if added to existing product, will allow Desk to receive a price of $65 per unit. The total cost of adding this new future is $44,000 and Desk expects to sell 2,800 units in the coming year. What is the net effect on the next-year's operating income of adding the feature to the product?

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