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b. [7.5 marks] A small pump costs $20,000 and has a life of eight years. The...
Answer the following multiple-choice question. You have to select the correct option and provide a complete...
Answer the following multiple-choice question. You have to
select the correct option and provide a complete correct solution.
b. A small pump costs $20,000 and has a life of eight years. The pump will have a $4,000 SV at that time. If the 150% DB method is used to depreciate the pump, the BV at the end of year five is approximately equal to i. $5,000 ii. $6,000 iii. $7,000 iv. $8,000
a. A supermarket chain buys loaves of bread from its supplier at $0.5 per loaf and...
a. A supermarket chain buys loaves of bread from its supplier at $0.5 per loaf and sells them at $0.75 per loaf. The chain is considering two options to bake its own bread. Capital investment Useful life (Years) Annual fixed costs Machine A $8,000 7 $2,000 Machine B $12,000 7 $3,500 Neither machine has a market value at the end of seven years, and MARR is 10% per year. If the demand for bread at this supermarket is 20,000 loaves...
c. [7.5 marks] The city council is considering the purchase of a new fire truck. The...
c. [7.5 marks] The city council is considering the purchase of a new fire truck. The capital investment is $50,000 and the maintenance expenses per year are $6,000. The fire truck has a life of six years and by using this truck there will be an annual reduction in fire damage of $20,000. If the MARR is 12% per year, what is the modified B-C ratio for this truck using the annual worth method? i. 1.15 ii. 0.87 iii. 1.64...
You purchased a machine five years ago for $100,000. It has a useful life of 10...
You purchased a machine five years ago for $100,000. It has a useful life of 10 years and you depreciate it using straight line depreciation to an expected salvage value at the end of its life of $5,000. It currently has a salvage value of $20,000. You are considering purchasing a new machine for $175,000. The new machine is expected to have a salvage value of $35,000 at the end of its life. It will cost $8,000 to ship the...
A municipal council purchased a water supply pump at a cost of RM 200,000 two years ago to be useful for eight years. T...
A municipal council purchased a water supply pump at a cost of RM 200,000 two years ago to be useful for eight years. This pump can be replaced with an improved version for preference and satisfaction of public water supply in municipal area. The present market value, annual maintenance cost and ultimate salvage value of the two pumps are given in Table 4. The expected economic life of the improved version pump is six years. The bank interest rate is...
Fields Company purchased equipment on January 1 for $180,000. This system has a useful life of...
Fields Company purchased equipment on January 1 for $180,000. This system has a useful life of 8 years and a salvage value of $20,000. The company estimates that the equipment will produce 40,000 units over its 8-year useful life. Actual units produced are: Year 1 – 4,000 units; Year 2 – 6,000 units; Year 3 – 8,000 units; Year 4 – 5,000 units; Year 5 – 4,000 units; Year 6 – 5,000 units; Year 7 – 7,000 units; Year 8...
A machine purchased for $50,000 has a depreciable life of four years. It will have an...
A machine purchased for $50,000 has a depreciable life of four years. It will have an expected salvage value of $ 6,000 at the end of the depreciable life. 1. Using the straight-line method, what is the book value at the end of year 2? a. $27,000 b. $ 28,000 c. $35,000 d. $25,000 2. If the double-declining balance (200% DB) method is used, what is the depreciation amount for year 2? a. $10,000 b. $12,500 c. $20,000 d. $17,500...
16 marks) Wulston 334 marks) Better Life Hospital purchased an X-ray machine on 3 April 2019...
16 marks) Wulston 334 marks) Better Life Hospital purchased an X-ray machine on 3 April 2019 at a cost of $405 The estimated useful life of this machine was five years and estimated residual van imated residual value was $24,000. The management estimates that the machine can take 300,000 pictures during the useful life. Workings are required for the answers below. (a) Compute the depreciation expense of the X-ray machine at the year-end on 31 December for 2019 and 2020...
Book & Accounting Bookstore has used an old coding machine for 3 years and to buy...
Book & Accounting Bookstore has used an old coding machine for 3 years and to buy a new coding machine to help control book inventories. The price of new machine is $35,000 and it requires working capital of $4,000. Its estimated useful life is 5 years and estimated salvage value for the calculation of depreciation is $5,000. The disposal value of the new machine will be $6,000 at the end of its useful life. Recovery of working capital will be...
A small construction project having a useful life of 5 years has five mutually exclusive alternatives....
A small construction project having a useful life of 5 years has five mutually exclusive alternatives. With an MARR of 6% and using incremental IRR which alternative should be selected? Note: First solve for the IRR for each alternative. You may use a spreadsheet to iterate to solve, but solve for the IRR for Alternative II 'by hand' by iterating between the interest rate tables in the back of the book. Alternatives III $400 $90 Initial Cost Uniform Annual Benefit...
Answer the following multiple-choice question. You have to
select the correct option and provide a complete correct solution.
b. A small pump costs $20,000 and has a life of eight years. The pump will have a $4,000 SV at that time. If the 150% DB method is used to depreciate the pump, the BV at the end of year five is approximately equal to i. $5,000 ii. $6,000 iii. $7,000 iv. $8,000
a. A supermarket chain buys loaves of bread from its supplier at $0.5 per loaf and sells them at $0.75 per loaf. The chain is considering two options to bake its own bread. Capital investment Useful life (Years) Annual fixed costs Machine A $8,000 7 $2,000 Machine B $12,000 7 $3,500 Neither machine has a market value at the end of seven years, and MARR is 10% per year. If the demand for bread at this supermarket is 20,000 loaves...
c. [7.5 marks] The city council is considering the purchase of a new fire truck. The capital investment is $50,000 and the maintenance expenses per year are $6,000. The fire truck has a life of six years and by using this truck there will be an annual reduction in fire damage of $20,000. If the MARR is 12% per year, what is the modified B-C ratio for this truck using the annual worth method? i. 1.15 ii. 0.87 iii. 1.64...
A municipal council purchased a water supply pump at a cost of RM 200,000 two years ago to be useful for eight years. This pump can be replaced with an improved version for preference and satisfaction of public water supply in municipal area. The present market value, annual maintenance cost and ultimate salvage value of the two pumps are given in Table 4. The expected economic life of the improved version pump is six years. The bank interest rate is...
A machine purchased for $50,000 has a depreciable life of four years. It will have an expected salvage value of $ 6,000 at the end of the depreciable life. 1. Using the straight-line method, what is the book value at the end of year 2? a. $27,000 b. $ 28,000 c. $35,000 d. $25,000 2. If the double-declining balance (200% DB) method is used, what is the depreciation amount for year 2? a. $10,000 b. $12,500 c. $20,000 d. $17,500...
16 marks) Wulston 334 marks) Better Life Hospital purchased an X-ray machine on 3 April 2019 at a cost of $405 The estimated useful life of this machine was five years and estimated residual van imated residual value was $24,000. The management estimates that the machine can take 300,000 pictures during the useful life. Workings are required for the answers below. (a) Compute the depreciation expense of the X-ray machine at the year-end on 31 December for 2019 and 2020...
Book & Accounting Bookstore has used an old coding machine for 3 years and to buy a new coding machine to help control book inventories. The price of new machine is $35,000 and it requires working capital of $4,000. Its estimated useful life is 5 years and estimated salvage value for the calculation of depreciation is $5,000. The disposal value of the new machine will be $6,000 at the end of its useful life. Recovery of working capital will be...
A small construction project having a useful life of 5 years has five mutually exclusive alternatives. With an MARR of 6% and using incremental IRR which alternative should be selected? Note: First solve for the IRR for each alternative. You may use a spreadsheet to iterate to solve, but solve for the IRR for Alternative II 'by hand' by iterating between the interest rate tables in the back of the book. Alternatives III $400 $90 Initial Cost Uniform Annual Benefit...
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