Question

In: Economics

A company spends $120,000 on equipment. The annual benefit is $1,850. The company spends $13,000 and...

A company spends $120,000 on equipment. The annual benefit is $1,850. The company spends $13,000 and $16,500, at the end of 3 years and 5 years. And, lastly salvaged with $27,000 at the end of it's 8 year life. After 8 years the company wants to find EUAB over 8 years. How much is it?

Int. rate = 9%

Solutions

Expert Solution

EUAB : Equivalent Uniform Anuual Benefit

= Annual Benefit +[ Salvage value (A/F , i, t ) ]

Given ,

Annual Benefit = $ 1850

Salvaged Value = $ 27000

Life = 8 years

Intt Rate = 9%

EUAB = $ 1850 + [ 27000*( A/F, 9%, 8)]

= $1850 + ( 27000 * .0907)

= $1850 + 24489

= $ 26339

Hence , The Equivalent Uniform annual benefits is $ 26339


Related Solutions

Suppose Bonnet Company acquires some equipment from Grenoble Company in exchange for issuance of 13,000 shares...
Suppose Bonnet Company acquires some equipment from Grenoble Company in exchange for issuance of 13,000 shares of Bonnet's common stock. The equipment was carried on Grenoble's book at the $550,000 original cost less accumulated depreciation of $250,000. Bonnet's stock actively trades and has a current market value of $50 per share. Its par value is $9 per share. Requirements 1 By using the balance sheet equation, show the effects of the transaction of the accounts of Bonnet company and Grenoble...
Question (2) ABC Company purchased equipment at a cost of $120,000 on January 1, 2018 that...
Question (2) ABC Company purchased equipment at a cost of $120,000 on January 1, 2018 that it expects to be useful for four years, and to have a residual value of $8,000. The Company uses the Double-declining balance method for depreciation. Required: Compute the Depreciation expense for each of 2018 and 2019.   
BITFIT is considering the purchase of new equipment. The equipment costs $360,000, and an additional $120,000...
BITFIT is considering the purchase of new equipment. The equipment costs $360,000, and an additional $120,000 is needed to install it. The equipment will be depreciated straight-line to zero over a 6-year life. The equipment will generate additional annual revenues of $265,000, and it will have annual cash operating expenses of $80,000. The equipment will be sold for $75,000 after 6 years. An inventory investment of $73,000 is required during the life of the investment and will be recovered by...
Reynolds Construction (RC) needs a piece of equipment that costs $120,000. The equipment has an economic...
Reynolds Construction (RC) needs a piece of equipment that costs $120,000. The equipment has an economic life of 3 years and no residual value. The equipment will not require maintenance because its useful life is so short. RC can borrow the full cost of the equipment at an interest rate of 9% with payments due at the end of the year. Alternatively, RC can lease the equipment for $45,000 with payments due at the end of the year. Assume RC...
On January 1, 2019, Pete Company purchases manufacturing equipment for $120,000. Installation and delivery costs totaled...
On January 1, 2019, Pete Company purchases manufacturing equipment for $120,000. Installation and delivery costs totaled $8,000. Yearly maintenance costs on the equipment are expected to be $6,000. The expected useful life is 8 years with a salvage value of $12,000. - What amount should Pete Company have in its equipment account after the purchase? - What amount of depreciation expense would Pete Company record in 2019? - What amount of accumulated depreciation expense would Pete Company report on its...
A property was purchased by an investor. The property is expected to produce $120,000 of annual...
A property was purchased by an investor. The property is expected to produce $120,000 of annual net operating income in year 1; increasing $10,000 every year thereafter. The owner intends to sell the property at the end of year 5. a. Assuming the bank requires a 1.2 debt coverage service ratio based on the expected first year NOI, what is the maximum monthly mortgage payment? b. Assuming the mortgage has a 6% annual interest rate, amortizes over 30 years, with...
Warren County Telephone Company claims in its annual report that “the typical customer spends $61 per...
Warren County Telephone Company claims in its annual report that “the typical customer spends $61 per month on local and long-distance service.” A sample of 12 subscribers revealed the following amounts spent last month. $63 $67 $65 $68 $60 $65 $68 $62 $64 $63 $54 $67 a. What is the point estimate of the population mean? (Round your answer to 3 decimal places.) Estimated population mean $: b. Develop a 98% confidence interval for the population mean. (Use t Distribution...
Warren County Telephone Company claims in its annual report that “the typical customer spends $60 per...
Warren County Telephone Company claims in its annual report that “the typical customer spends $60 per month on local and long-distance service.” A sample of 12 subscribers revealed the following amounts spent last month. $64 $63 $63 $68 $56 $64 $68 $62 $64 $54 $54 $69 a. What is the point estimate of the population mean? (Round your answer to 3 decimal places.) Estimated population mean $ b. Develop a 98% confidence interval for the population mean. (Use t Distribution...
Warren County Telephone Company claims in its annual report that “the typical customer spends $61 per...
Warren County Telephone Company claims in its annual report that “the typical customer spends $61 per month on local and long-distance service.” A sample of 12 subscribers revealed the following amounts spent last month.   $64 $65 $64 $68 $58 $64 $68 $63 $64 $60 $54 $67 a. What is the point estimate of the population mean? (Round your answer to 3 decimal places.)   Estimated population mean $    b. Develop a 95% confidence interval for the population mean. (Use t Distribution...
Warren County Telephone Company claims in its annual report that "the typical customer spends $60 per...
Warren County Telephone Company claims in its annual report that "the typical customer spends $60 per month on local and long-distance service." A sample of 12 subscribers revealed the following amounts spent last month.   $63 $65 $64 $67 $56 $65 $68 $63 $64 $62 $55 $67 (a) What is the point estimate of the population mean? (Round your answer to 3 decimal places. Omit   the "$" sign in your response.)   Estimated population mean $    (b) Develop a 99 percent confidence...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT