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. (b) Based on your answer of Q34, Determine the number of days per year that snow removal is required in order to justify the purchase decision. 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. (a)
Determine Net Present Worth for buying option. Use an interest rate
of 10% per year

a used computer with remainig life of 5 years and 10.000 salvage
value can be purchased for 40.000 the annual maintanence cost is
expected to 20 000 per year ın addition operating costs are
expected to be 25 per hour altenatively a new computercan be rented
for 150 per hour at an interest rate 10% per year what is the
minimum number of hours per year the used computer must be utilized
to justify its purchase(number of hı-ours per year...

A small aerospace company is evaluating two alternatives: the
purchase of an automatic-feed machine and a manual-feed machine for
a product’s finishing process. The auto-feed machine has an initial
cost of $23,000, an estimated salvage value of $4,400 and a
predicted life of 10 years. One person will operate the machine at
a cost of $12 an hour. The expected output is 8 tons per hour.
Annual maintenance and operating cost is expected to be $3,500.
The manual-feed machine has...

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...

Delta Machine Company purchased a computerized assembly machine
for $135,000 on January 1, 2018. Delta Machine Company estimated
that the machine would have a life of four years and a $25,000
salvage value. Delta Machine Company uses the straight-line method
to compute depreciation expense. At the beginning of year 3 (2020)
Delta discovered that the machine was quickly becoming obsolete and
would have little value at the end of its useful life.
Consequently, Delta Machine Company revised the estimated salvage...

a contractor needs a bulldozer. He can purchase it from the
market or rent it from a dealer .
A used bulldozer with a remaining life of 10 years and QR
10,000 salvage value can be purchased for QR 40,000. The annual
maintenance cost of the used bulldozer is assumed to be QR 20,000
per year. In addition, operating Cost of the bulldozer is expected
to be QR 25 per hour.
Alternatively, a bulldozer can be rented for Qr 150/hr...

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) ABC Company purchased a $20,000desk-top laser cutting
machine 1year ago. The company was expected it can last
for 5years and a salvage value of $5,000. Since it was
accidentally dropped on the floor last year, $3,000was paid for
repairs, and its current operating costs are running at the rate of
$4,000 annually. It is expected to be increased $1,000more from the
next year onwards. Recently, the company has found that
it has a market value of $8,000in second-hand market. At
the same time,...

A company would like to purchase a machine for $200,000 with a
life of 11 years. They estimate the salvage value to be 6% of the
initial machine cost. If other operating costs are estimated to be
$30,000 per year. The interest rate the company uses to justify
their investments is 5% per year compounded yearly.
a. What is the capital recovery cost?
b. What is the minimum amount of annual revenue ($? per year) that
makes this investment an...

DISCUSS QUESTION #4 The Oxford Equipment Company purchased a
machine 5 years ago at a cost of $85,000. The machines expected
life is 10 years and is being depreciated by the straight-line
method at a rate of $8,500 per year. If the machine is kept, it can
be sold for $15,000 at the end of its expected life. A new machine
can be purchased for $170,000. It has an expected life of 5 years
and will reduce cash operating expenses...

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