Question

In: Economics

a piece of construction equipment will cost $71,000 new and willhave an expected life of...

a piece of construction equipment will cost $71,000 new and will have an expected life of 6 years, with no remaining value at the end of its life. what is the equivalent uniform annual cost of this piece of equipment if the interest rate is 10%?

Solutions

Expert Solution

given that Asset price= $ 71000

n=6 years

interest rate = 10% =0.10

Equivalent Uniform annual cost =

=

=

=

=

so the equivalent uniform annual cost =$ 16300

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

A construction company purchased a piece of equipment for $1470. The expected life is 8000 hours,...
A construction company purchased a piece of equipment for $1470. The expected life is 8000 hours, after which it will have a salvage value of $310. Find the amount of depreciation for the first year if the piece of equipment was used for 2000 hours. Use the units-of-production method of depreciation.
Bracy Company acquired a new piece of construction equipment on January 1, 2015, at a cost...
Bracy Company acquired a new piece of construction equipment on January 1, 2015, at a cost of $92,300. The equipment was expected to have a useful life of 7 years and a residual value of $16,000 and is being depreciated on a straight-line basis. On January 1, 2016, the equipment was appraised and determine to have a fair value of $92,920, a salvage value of $16,000, and a remaining useful life of six years. a. Determine the amount of depreciation...
Bracy Company acquired a new piece of construction equipment on January 1, 2015, at a cost...
Bracy Company acquired a new piece of construction equipment on January 1, 2015, at a cost of $141,000. The equipment was expected to have a useful life of 14 years and a residual value of $22,000 and is being depreciated on a straight-line basis. On January 1, 2016, the equipment was appraised and determined to have a fair value of $153,690, a salvage value of $22,000, and a remaining useful life of thirteen years. a. Determine the amount of depreciation...
You are considering the acquisition of a new piece of equipment with a useful life of...
You are considering the acquisition of a new piece of equipment with a useful life of five years. This new technology will make your clinical operation more efficient and allow for a reduction of 10 FTEs. The equipment purchase price is $4,500,000 plus 10% installation fee. The purchase price includes service for the first year, an item that has an annual cost of $10,000. There is a potential for additional volume of 150,000 units in the first year, growing by...
You are considering the acquisition of a new piece of equipment with a useful life of...
You are considering the acquisition of a new piece of equipment with a useful life of five years. This new technology will make your clinical operation more efficient and allow for a reduction of 10 FTEs. The equipment purchase price is $4,500,000 plus 10% installation fee. The purchase price includes service for the first year, an item that has an annual cost of $10,000. There is a potential for additional volume of 150,000 units in the first year, growing by...
Tank Ltd is considering undertaking the purchase of a new piece of equipment that is expected...
Tank Ltd is considering undertaking the purchase of a new piece of equipment that is expected to increase pre-tax income(EBITDA) by $7,000 each year for the next 5 years. It costs $25,000 to purchase today and for tax purposes must be depreciated down zero over its 8 year useful life using the straight-line method. If Tank is actually forecasting a salvage (for capital budgeting purposes) of $8,000 after 5 years, what is the machine's net cash flow (after tax) for...
considering investing in a new piece of equipment that is expected to generate $30,000 of revenue...
considering investing in a new piece of equipment that is expected to generate $30,000 of revenue the first year, increasing 15% per year for the 9 year useful life. The salvage value is expected to be 20% of the initial investment. Using a MARR of 10% and an equivalent worth method, determine the maximum your company should pay for the equipment in order for this to be a satisfactory investment.
The expected annual maintenance expense for a new piece of equipment is $10,000. This is Alternative...
The expected annual maintenance expense for a new piece of equipment is $10,000. This is Alternative A. Alternatively, it is possible to perform the maintenance every fifth year at a cost of $50,000 (Alternative B). In either case, maintenance will be performed in the fifth year so that the equipment can be sold for $100,000 at that time. If the MARR is 15% per year (before income taxes), which alternative should be recommended in each of these situations? a) Before...
Tank Ltd is considering undertaking the purchase of a new piece of equipment that is expected...
Tank Ltd is considering undertaking the purchase of a new piece of equipment that is expected to increase revenue by $12,000 each year for six years. The equipment will increase costs $4,000 each year for six years. It costs $32,000 to purchase today and for tax purposes must be depreciated down to zero over its 8 year useful life using the straight-line method. If Tank is actually forecasting a salvage (for capital budgeting purposes) of $5,000 after 6 years, what...
ben is considering the purchase of new piece of equipment. the cost savings from the equipment...
ben is considering the purchase of new piece of equipment. the cost savings from the equipment would result in an annual increase in net income of $200000. the equipment will have an initial cost of $1200000 and have an 8 year life. the salvage value of the equipment is estimated to be $200000. the hurdle rate is 10%. what is accounting rate of return? b) what is the payback period? c) what is the net present value? d) what would...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT