Question

In: Economics

White Oaks Properties builds strip shopping centers and small malls. The company plans to replace its...

White Oaks Properties builds strip shopping centers and small malls. The company plans to replace its refrigeration, cooking and HVAC equipment with newer models in one entire center built 11 years ago. 11 years ago, the original purchase price of the equipment was $675,000 and the operating cost has averaged $235,000 per year. Determine the equivalent annual cost of the equipment if the company can now sell it for $234,000. The company's MARR is 22% per year.

The equivalent annual cost of the equipment is determined to be $_________?

Solutions

Expert Solution

I = 22%

N = 11

The equivalent annual cost

= [-675000-235000*(A/P,22%,11)+234000*(A/F,22%,11)] / (A/P,22%,11)

= [-675000-235000*0.247807+234000*0.027807] / 0.247807

= -726728/0.247807

= -2932635


Related Solutions

what are the negative effects of shopping from malls instead of the small shops?
what are the negative effects of shopping from malls instead of the small shops?
1) Real estate investment trusts may invest in I. commercial properties such as shopping malls. II....
1) Real estate investment trusts may invest in I. commercial properties such as shopping malls. II. residential rental properties. III. mortgages. IV. combinations of property and real estate related debt. A. I, II, and III only B. I, II, III and IV C. II and IV only D. I and III only 2) Prices of residential properties tend to weaken when I. unemployment increases. II. interest rates fall. III. interest rates rise. IV. economic levels are high. A. I, II,...
Shady Sunglasses operates retail sunglass kiosks in shopping malls. Below is information related to the company:...
Shady Sunglasses operates retail sunglass kiosks in shopping malls. Below is information related to the company: (dollar amounts in thousands) 2012 2013 2014 2015 2016 2017 Net Cash Flow from Operations 564 628 854 1059 1345 1655 Interest Expense after tax 122 134 148 145 155 148 Decrease (Increase) in Cash Required for Operations -75 -54 -48 -32 -61 -48 Net Cash Flow from Investing -287 -300 -310 -285 -294 -277 Net Cash from Debt Financing 210 204 140 85...
Shady Sunglasses operates retail sunglass kiosks in shopping malls. Below is information related to the company:...
Shady Sunglasses operates retail sunglass kiosks in shopping malls. Below is information related to the company: (dollar amounts in thousands) 2012 2013 2014 2015 2016 2017 Net Cash Flow from Operations 564 628 854 1059 1345 1655 Interest Expense after tax 122 134 148 145 155 148 Decrease (Increase) in Cash Required for Operations -75 -54 -48 -32 -61 -48 Net Cash Flow from Investing -287 -300 -310 -285 -294 -277 Net Cash from Debt Financing 210 204 140 85...
A company plans to replace its manual production system with an automated one Currently 5 people...
A company plans to replace its manual production system with an automated one Currently 5 people (2 on first shift, 2 on second, and one on third) are used. Their annual wages are $41,250 per person. Operating and maintenance of the new automated system will be 5.5% of the first cost of the system. The income tax rate is 40% and straight line depreciation is used over a 15 year life with no salvage. Salvage is expected to be 8%...
. Bill builds benches in a small shop and he plans to operate five 8-hour days...
. Bill builds benches in a small shop and he plans to operate five 8-hour days per week. Each bench has two ends and a top. It takes 5 minutes to cut and sand each end and 2 minutes to make each top. Assembly requires 8 minutes per bench, and painting requires 5 minutes per bench. Bill has one employee who makes the tops and ends. Bill will do the final assembly and painting. He also plans 1 hour per...
Company A plans to replace with one of their current equipment with one of the three...
Company A plans to replace with one of their current equipment with one of the three options shown in the table. Option A B C Initial Cost 200 350 475 Annual Operation Cost 450 275 300 Salvage Value 75 60 80 Estimated Life in Year 20 20 20 Perform AW analysis to figure out which option should company A choose. The rate of return is 8% per year compounded Monthly. Please see correct answer below how do you get this?...
The Cherry & White Bike Company is a small closely-held company with two owners. Its two...
The Cherry & White Bike Company is a small closely-held company with two owners. Its two owners, Charlotte and George, have decided to expand the business. You are CWB’s accountant. Your responsibilities include maintaining all accounting records and preparing annual financial statements. CWB wants to take out a loan to expand its business in the coming year. The banks and lending institutions require a set of financial statements prepared under U.S. GAAP to evaluate CWB’s credit worthiness. You must prepare...
Cherry & White Bike Company The Cherry & White Bike Company is a small closely-held company...
Cherry & White Bike Company The Cherry & White Bike Company is a small closely-held company with two owners. Its two owners, Charlotte and George, have decided to expand the business. You are CWB’s accountant. Your responsibilities include maintaining all accounting records and preparing annual financial statements. CWB wants to take out a loan to expand its business in the coming year. The banks and lending institutions require a set of financial statements prepared under U.S. GAAP to evaluate CWB’s...
The Cordis Building Works Company modifies and builds portable offices and homes based on customized plans...
The Cordis Building Works Company modifies and builds portable offices and homes based on customized plans using everything from shipping containers, to modular homes. The company has been in business for 35 years and has prided itself on providing a very competitive salary and great benefits as well as retaining most of its original employees since they began. While they originally began the company doing creative designs and one of a kind housing and office buildings, much of the routine...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT