A man bought a machine for P66,463 six years ago. It has a salvage value of...

A man bought a machine for P66,463 six years ago. It has a salvage value of P11,373 four years from now. He sold it now for P12,930. What is the sunk cost or the value of the machine that the man lost if the depreciation method used is a Straight-Line method?

Solutions

Expert Solution

value of the asset six years ago = 66463

total life of the asset = 10 years

depreciation of the asset under straight line method = 66463/10= 6646.3 per annum

value of the asset after six years = 66463- (6646.3*6)=66463-39877.8 = 26585.2

salvage value after six years = 11373

realisable value of the asset =26585.5-11373 =15212.2

machine sold at the sixth year at = 12930

so the value of the machine that the man lost is , 15212.2-12930 =2282.2

Answer = P2282.2

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

A company is considering replacing a machine that was bought six years ago for $50,000.

A company is considering replacing a machine that was bought six years ago for $50,000. The machine, however, can be repaired and its life extended by five more years. If the current machine is replaced, the new machine will cost $44,000 and will reduce the operating expenses by $6,000 per year. The seller of the new machine has offered a trade-in allowance of $15,000 for the old machine. If MARR is 12% per year before taxes, how much can the...

If 5 years ago a company bought a $10,500 piece of equipment with $500 salvage value...

If 5 years ago a company bought a $10,500 piece of equipment with $500 salvage value and 10 year usefull life and is using straight-line depreciation what is its book value now? If it revises estimated life to 15 years (10 more years left) what is revised annual depreciation? What is the cost-allocation account for a natural resourse? On January 1, Company sells merchandise and collects $5000 in cash which includes 6% sales tax. Journalize the sale. Company’s employees earned...

A Machine purchased six years ago for Rs 150,000 has been depreciated to a book value...

A Machine purchased six years ago for Rs 150,000 has been depreciated to a book value of Rs 90,000. It originally has projected life of 15 years and zero salvage value. A new machine will cost Rs 350,000 and result in reduction of operating cost of Rs 40,000 in first year which will increase @8% for next eight years. The older machine could be sold for Rs 135,000. The cost of capital is 10%. The new machine will be depreciated...

4) Machine A costs $35,000, lasts 3 years and has a salvage value of $7,500. Machine...

4) Machine A costs $35,000, lasts 3 years and has a salvage value of $7,500. Machine B costs $25,000, lasts 2 years and has a salvage value of $3,500. The machines can be purchased at the same price with the same salvage value in the future, and are needed for a 6 year project. Which machine would you purchase and why? Provide justification using an Annualized Equivalent Cost analysis. Interest is 10% annual rate, compounded annually. Answer______________________________________

It has been exactly 6 years since Alan bought his house for $375,000. Six years ago,...

It has been exactly 6 years since Alan bought his house for $375,000. Six years ago, he paid $75,000 as a down payment and took out a 35-year mortgage for the remaining amount with monthly payments and a quoted APR of 5.5% (with semi-annual compounding). Today, Alan has received a promotion to a higher paying managerial position at his firm. He has decided to pay part of his mortgage in order to reduce his monthly payments. Alan has already made...

It has been exactly 6 years since Alan bought his house for $375,000. Six years ago,...

A company is considering replacing a machine that was bought five years ago for $45,000. The...

A company is considering replacing a machine that was bought five years ago for $45,000. The machine, however, can be repaired and its life extended four more years. If the current machine is replaced, the new machine will cost $44,000 and will reduce the operating expenses by $5,200 per year. The seller of the new machine has offered a trade-in allowance of $14,700 for the old machine. If MARR is 8% per year before taxes, how much can the company...

Six years ago, an investor bought a property for $2.5 million with 10% down and a...

Six years ago, an investor bought a property for $2.5 million with 10% down and a 20 year mortgage with an interest rate of 5.6% a year. What were the monthly payments? 5 points Today the company sold the property and had an annual return of 10% on their investment. What was the price of the property when it was sold? 5 points How much equity was in the property when it was sold? 5 points If the company had...

A machine costs Rs. 10,000 with useful life of 5 years. It has a salvage value...

A machine costs Rs. 10,000 with useful life of 5 years. It has a salvage value of Rs. 2,000 at the end of its useful life. The machine is expected to generate the following cash flows; Year Cash Flow (PKR) 1 5,000 2 6,000 3 8,000 4 6,500 5 4,000 Calculate Accounting Rate of Return? Tax is applied at 30% per annum. Why Accounting Rate of Return is not among the favorite methodology to evaluate a project? In what circumstances...

A machine costs $460,000, has a $36,000 salvage value, is expected to last eight years, and...

A machine costs $460,000, has a $36,000 salvage value, is expected to last eight years, and will generate an after-tax income of $100,000 per year after straight-line depreciation. Assume the company requires a 10% rate of return on its investments. Compute the net present value of each potential investment. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) A new operating system for an existing machine is expected to...

Subjects