A precision lathe costs $20,000 and will cost $30,000 a year to operate and maintain. If the discount rate is 12% and the lathe will last for 5 years, what is the equivalent annual cost of the tool? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Enter your answer as a positive value.

A precision lathe costs $20,000 and will cost $30,000 a year to operate and maintain. If the discount rate is 12% and the lathe will last for 5 years, what is the equivalent annual cost of the tool? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Enter your answer as a positive value.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 17EA: Gardner Denver Company is considering the purchase of a new piece of factory equipment that will...

See similar textbooks

Similar questions

Econo - Cool air conditioners cost $390 to purchase, result in electricity bills of $168 per year, and last for 5 years. Luxury Air models cost $590, result in electricity bills of $136 per year, and last for 8 years. The discount rate is 23%. a. What is the equivalent annual cost of the Econo-Cool model? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What is the equivalent annual cost of the Luxury Air model? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. Which model is more cost-effective? multiple choice 1 Econo-Cool Luxury Air d-1. Now you remember that the inflation rate is expected to be 10% per year for the foreseeable future. What are the equivalent annual cost of the Econo - Cool and Luxury Air model? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. d-2, Which model is more cost- effective? multiple choice 2 Econo - Cool Luxury Air
A firm can lease a truck for 4 years at a cost of $30,000 annually. It can instead buy a truck at a cost of $80,000, with annual maintenance expenses of $10,000. The truck will be sold at the end of 4 years for $20,000. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 10%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Econo Cool air conditioners cost $380 to purchase, result in electricity bills of $166 per year, and last for 5 years. Luxury Air models cost $580, result in electricity bills of $132 per year, and last for 8 years. The discount rate is 20% a. What is the equivalent annual cost of the Econo-Cool model? Note: Do not round intermediate calculations. Round your answer to 2 decimal places..
The initial cost of a van is $22,800; its salvage value after 5 years will be $8500. Maintenance is estimated to be a uniform gradient amount of $225 per year (with no maintenance costs the first year), and the operation cost is estimated to be 36 cents/mile for 400 miles/month. If money is worth 6%, what is the approximate equivalent uniform annual cost (EUAC) for the van, expressed as a monthly cost?
If a machine is bought at a price of P94,783.00 that would have an economic life of 14 years, at what year t will the book value be P34,660.00? Use DDBM.( Double Declining Balance Method
Suppose that, the carburettors were purchased, and the company could use the freed capacityto launch a new product. It is expected that the segment margin of the new product would be£150,000 per year. Discuss whether the company should accept the offer to buy thecarburettors for £35.00 per unit? (Show all computations)
Perform a present worth analysis of equal-service machines that have the costs shown on the next page, if the MARR is 10% per year. Revenues for all three alternatives are expected to be the same.
Your company is looking at purchasing a front-end loader at a cost of $120,000. The loader can be billed out at $107.00 per hour. It costs $30.00 per hour to operate the front-end loader and $37.00 per hour for the operator. The useful life of the equipment is five years. Using 1,200 billable hours per year and a MARR of 10%, determine the payback period with interest for the front-end loader. 2.89 4.15 4.52 3.74 3.02 Please write to text formet but don't copy paste
What is the annual equivalent cost of purchasing a lift truck that has an initial cost of $65,000, anannual operating cost of $13,500, and an estimatedsalvage value of $23,000 after six years of use at anannual interest rate of 6%?
You are the owner of a small boutique. You need to decide if you should upgrade your storage and display counters. The total cost is $2,000, and the depreciation rate is 8% per year. The expected increase in next year’s revenues as a result of the investment is $400. Assuming an annual interest rate of 5%, answer the following questions: (a) What is the present value of the benefits? (b) What is the present value of the costs? (c) Should you make this investment?
Two 70 horsepower motors are being considered for use. If power costs $0.18 per kWh, and if the interest rate is 15%, how many hours of operation per year is required to justify the purchase of XYZ brand motor? (1 HP=0.746 kW) Which motor would you select if the motor is expected to operate 2500 hours per year? Let X = operating hours per year. Questions; a. The annual energy cost of electrical power for Motor ABC is ( .... × X).(Round to three decimal places.) b. The annual energy cost of electrical power for Motor XYZ is $( .... ×X).(Round to three decimal places.) c. Minimum ..... hours of operation per year are required to justify the purchase of XYZ brand motor. (Round to the nearest whole number.)
Suppose that the current price of titanium is $500 per oz with costless storage. The term structure is flat witha continuously compounded rate of interest of 4% for all maturities.a) Find the forward price of titanium with delivery in three months.b) Assume it costs $0.5 per oz per month to store titanium. The storage cost is payable monthly in advance.What is the new forward price? What can explain the price difference in (a) and (b)?c) Assume storage costs are as in (b) and payable monthly in advance. If the forward price is given to be$550 per oz, explain whether there is an arbitrage opportunity and how to exploit it. Use a table showingtransactions and total net cash flows at the end of each month.