Question

A company has a need for a snow removal machine. The machine can be purchased for the cost of $25,000. The machine is expected to have a life of 6 years with no salvage value. The annual operating cost amounts to $5,000. Alternatively, the machine can be rented at the cost of $400 per day payable at the end of the year. (a) Determine Net Present Worth for buying option. Use an interest rate of 10% per year

Answer #1

A company has a need for a snow removal machine. The machine can
be purchased for the cost of $25,000. The machine is expected to
have a life of 6 years with no salvage value. The annual operating
cost amounts to $5,000. Alternatively, the machine can be rented at
the cost of $400 per day payable at the end of the year. (b) Based
on your answer of Q34, Determine the number of days per year that
snow removal is...

"A company is considering two types of machines for a
manufacturing process. Machine A has an immediate cost of $87,000,
and its salvage value at the end of 8 years of service life is
$29,000. The operating costs of this machine are estimated to be
$5700 per year. Extra income taxes are estimated at $1500 per year.
Machine B has an immediate cost of $44,000, and its salvage value
at the end of 8 years' service is neglible. The annual...

Assume a farmer has a choice of purchasing or leasing a machine.
If purchased, it would cost $40,000, have annual cash operating
expenses of $6,000, and a salvage value of $10,000 after 8 years.
Leasing would require an initial payment of $10,000, lease payments
of $12,500 at the end of each year, including the first, and the
same operating expenses of $6,000 per year with no salvage value.
Regardless of whether the machine is leased or purchased, it would
provide...

A
machine for refining operation was purchased 7 years ago for
160,000 SAR. Last year a replacement study was performed with the
decision to retain it for 3 more years. The situation has changed .
The equipment is estimated to have a value of 8,000 SAR now or
anytime in the future. If kept in service, it can be minimally
upgraded at a cost of 43,000 SAR which will make it usable for up
to 2 more years. Its operating...

"A company is considering two types of machines for a
manufacturing process. Machine A has an immediate cost of $61,000,
and its salvage value at the end of 4 years of service life is
$14,000. The operating costs of this machine are estimated to be
$3900 per year. Extra income taxes are estimated at $1800 per
year.
Machine B has an immediate cost of $45,000, and its salvage value
at the end of 4 years' service is neglible. The annual...

A company is considering the purchase of a new turning machine.
The company has two options, which are: buying a used machine for
SR 13,000 or a new one for SR 17,000. Because the new machine has
advanced control features, its operating cost is expected to be SR
7000 per year, while the used machine is expected to cost SR 9000
per year. Each machine is expected to have a 25-year life with a
10% of the purchase price as...

Machine X has an initial cost of $12,000 and annual maintenance
of $700 per year. It has a useful life of four years and no salvage
value at the end of that time. Machine Y costs $22,000 initially
and has no maintenance costs during the first year. Maintenance is
$200 at the end of the second year and increases by $200 per year
thereafter. Machine Y has a useful life of eight years and an
anticipated salvage value of $5,000...

What is the annual worth of a machine with an initial cost of
$25,000, an annual cost of $8,000 per year, a salvage value of +
$7,000, a useful life of 8 years, and a financing cost rate of 10%
per year?

Replacement Analysis BTCF
Machine A was purchased three years ago for $12,000 and had an
estimated market value
of $1,000 at the end of its 10-year life. Annual operating costs
are $1,500. The machine will perform satisfactorily for the next
seven years. A salesman for another company is offering machine B
for $60,000 with a market value of $5,000 after 10 years. Annual
operating costs will be $800. Machine A could be sold now for
$8,000, and the MARR is...

A certain machine has the estimates shown below:
Machine
First
Cost ($)
-20,000
Annual
operating cost ($/ year)
-10,000
Salvage
value ($)
4,000
Life
(years)
10
At an interest rate of 10% per year, the annual worth of this
machine is equal to:
Question 10 options:
-$13,004
-$13,254
-$12,658
-$15,270

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