Equipment that is purchased for $12,000 now is expected to be sold after ten years for $2000. The estimated maintenance is $1000 for the first year, but it is expected to increase $200 each year thereafter. The effective annual interest rate is 10%. What is the effective annual cost?
Equipment that is purchased for $12,000 now is expected to be sold after ten years for...
1. A drill press was purchased 4 years ago for $40,000. Its estimated salvage value after 7 years was $5,000. The press can b sold for $15,000 today, or for $12000, $9000, or $6000 at the ends of each of the next 3 years. The annual operating and maintenance cost for the next 3 years will be $2700 for this year and then will increase by $800 per year. Using a MARR of 10%, what is the marginal cost for...
Your company has to obtain some new production equipment to be used for the next ten years, and leasing is being considered. You have been directed to perform an after-tax study of the leasing approach. The data information for the study is as follows: Lease cost: First year, S70,000; second year, S60,000; third through ten years, S50,000 per year. Assume that a 10-year contract has been offered by the lessor that fixes these costs over the 10- year period. Other...
Please explain your answer! PART III Rimrock Construction Co. is purchasing a new piece of equipment for $34,000. The unit is expected to produce $21,000 for each of the next 4 years and will be sold at the end of that time for an expected salvage value of $4,000. Maintenance and expenses on the equipment are expected to be $2,000 for the fisrt year and to increase by $500 per year for each successive year of operation. Rimrock is purchasing...
A machine purchased a year ago for $85,000 costs more to operate than anticipated. At the time of the purchase, it was expected to be used for 10 years with annual maintenance costs of $22,000 and a salvage value of $10,000. However, last year, it incurred a cost $39,000, which is expected to escalate to $40,700 this year and increase by $1,700 each year thereafter. The market value is now estimated to be $65,000–$9,000k, where k is the number of...
1 Lucas Construction just purchased a new track hoe attachment costing $12,500. The CFO, Mr. Cameron Lucas, expects the implement will be used for five years when it is estimated to have a salvage value of $4,000. Maintenance costs are estimated to be $500 the first year and will increase by $100 each year thereafter. If a 12% interest rate is used, what is the equivalent uniform annual cost of the implement?
Deere Construction just purchased a new track hoe attachment costing $10,000. The CFO, John, expects the implement will be used for five years when it is estimated to have a salvage value of $2,500. Maintenance costs are estimated to be $0 the first year and will increase by $100 each year thereafter. If a 12% interest rate is used, what is the equivalent uniform annual cost of the implement? a) $3,054 b) $2,779 c) $2,825 d) $2,558
Gloria deposited $100 into a fund and $200 ten years later. Interest is credited at a nominal discount rate of d compounded quarterly for the first 10 years, and at a nominal interest rate of 5% compounded quarterly thereafter. The accumulated balance in the fund at the end of 25 years is $1000. Calculate d.
3.10 A company purchased new equipment for $250,000 now, that will require annual operations and maintenance (O&M) costs of $30,000 per year for 5 years starting 3 years from now. What is the present worth of these costs if the interest rate is 8% per year?
Tom is considering buying a $20,000 car. After five years, he will be able to sell the vehicle for $10,000. Gasoline costs will be $2000 per year, insurance $600 per year, and parking $400 per year. Maintenance costs for the first year will be $1000, rising by $200 per year thereafter. Assume all costs are payable at the end of the year. The alternative is for Tom to take taxis everywhere. This will cost an estimated $6000 per year. Tom...
A machine costs $120,000 today and has an estimated scrap cash value of $20,000 after ten years. Inflation is 6% per year The effective annual interest rate earned on money invested is 4%. How much money needs to be set aside each year to replace the machine with an identical model ten years from now? Select one: O a. $16,855 O b. $17,700 O C. $17,925 d. $16,235