A pipeline contractor can purchase a needed truck for $42,000. Its estimated life is 6 years, and it has no salvage value. Maintenance is estimated to be $2,500 per year. Operating expense is $60 per day. The contractor can hire a similar unit for $170 per day. MARR is 7%.
How many days per year must the truck’s services be needed such that the two alternatives are equally costly?
Determine the dollar amount of annual savings generated by using the preferred alternative rather than the nonpreferred.
Let the no. of days of operation be n, then
Annual cost of purchase = 42000 * (A/P, 7%,6) + 2500 + 60 * n
Annual cost of hire = 170 * n
For breakeven
42000 * (A/P, 7%,6) + 2500 + 60 * n = 170 * n
42000 * 0.209796 + 2500 = 170 * n - 60 * n
11311.42 = 110 * n
n = 11311.42 / 110 = 102.83 ~ 103 days
A pipeline contractor can purchase a needed truck for $42,000. Its estimated life is 6 years,...
Subaru of Indiana Automotive has an overhead crane that has an estimated remaining life of 10 years. The crane can be sold now for $9,000. If the crane is kept in service, it must be overhauled immediately at a cost of $5,500. Operating and maintenance costs will be $3,000 per year after the crane is overhauled. The overhauled crane will have zero MV at the end of the 8-year study period. A new crane will cost $20,000, will last for...
A firm can
purchase a centrifugal separator (5-year
MACRS property) for
$21,000.
The estimated
salvage value is
$2,500
after a useful
life of six years. Operating and maintenance
(O&M)
costs for the first year are expected to be
$2,100.
These
O&M
costs are projected to increase by
$500
per year each
year thereafter. The income tax rate is
25%
and the MARR
is
11%
after taxes.
What must the uniform annual benefits be for the purchase of the
centrifugal separator...
Solve the following problem using a spreadsheet. Your C
corporation needs a new track hoe for its operations and is looking
at three alternatives. The first alternative is to lease the track
hoe for 60 months. The monthly lease payment is $2,200 per month.
At the end of the lease, the track hoe will be returned to the
dealer. The lease excludes all maintenance and operational costs.
The second alternative is to purchase the track hoe with a 60-month
loan...
HDT Truck Company HDT Truck Company has been located in Crown Point, Indiana, since 1910. Its only products— large trucks—are built to individual customer specifications. The firm once produced automobiles but dropped out of the auto business in 1924. The firm nearly went out of business in the late 1930s, but by 1940 its fortunes were buoyed by receipt of several military contracts for tank retrievers—large-wheeled vehicles that can pull a disabled tank onto a low trailer and haul it...
INTRODUCTION Jaden McCoy operated a dairy goat farm in Soddy-Daisy, Tennessee, and was considering expanding the rental of his goats for land clearing. In early 2011, McCoy successfully bid on a job to clear a section of property at a nearby resort. McCoy's goats performed as expected and he eamed a small profit in the process. The resort manager was quite happy because the difficult-to-reach areas of the property were cleared on time and on budget at a cost well...
Analyze the case the answer the questions:
introduction of the case
assess the financial reporting landscape considering the user
needs, constraints, and business environment,
identify the issues,
analyze the issues (qualitatively and quantitatively), and
provide a recommendation and conclusion.
Original content only no copy-paste, please
INTRODUCTION Jaden McCoy operated a dairy goat farm in Soddy-Daisy, Tennessee, and was considering expanding the rental of his goats for land clearing. In early 2011, McCoy successfully bid on a job to clear a...
Zipcar: “It’s Not About Cars—It’s About Urban Life” Imagine a world in which no one owns a car. Cars would still exist, but rather than owning cars, people would just share them. Sounds crazy, right? But Scott Griffith, CEO of Zipcar, the world’s largest car-share company, paints a picture of just such an imaginary world. And he has nearly 800,000 passionate customers—or Zipsters, as they are called—who will back him up. Zipcar specializes in renting out cars by the hour...
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How can we assess whether a project is a success or a
failure?
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