Pump A Initial Cost: 7000 Salvage Value:1200 Useful Life:12 Pump B Initial Cost: 5000 Salvage Value:...

Pump A

Initial Cost: 7000

Salvage Value:1200

Useful Life:12

Pump B

Initial Cost: 5000

Salvage Value: 1000

Useful Life: 6

Two pumps are being considered for purchase. If interest is 9%, which pump should be bought?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Given an asset with initial cost of $20,000, useful life of 5 years, salvage value =...

Given an asset with initial cost of $20,000, useful life of 5 years, salvage value = 0, find the depreciation allowances and the book values using the a. Straight-Line Method b. MACRS

Manufacturing equipment has a capital cost of $50,000, salvage value of $5000, and an asset life...

Manufacturing equipment has a capital cost of $50,000, salvage value of $5000, and an asset life of 5 years. Compute the depreciation expense for the first 3 years under (a) accelerated cost recovery and (b) straight line.

7.If there is a change in an estimate of the salvage value and/ or useful life...

7.If there is a change in an estimate of the salvage value and/ or useful life of a company car, how would you calculate the change in the depreciation expense? Explain your answer and provide the formula you would use to solve this problem. 8.What is the difference between capital expenditures and revenue expenditures? 9.What is the difference between ordinary repairs and extraordinary repairs? 10.What is the formula to calculate depletion per unit? What are the steps to calculate the...

Cost Salvage Value Useful Life Units of Production MACRS Class Life Asset #1 $ 1,400,000 $ ...

Cost Salvage Value Useful Life Units of Production MACRS Class Life Asset #1 $ 1,400,000 $ 100,500 5 2016 41,000 5 * Total units of 2017 48,000 output = 2018 26,000 160,000 On january 1st 2016, the company purchased the above asset. Then, calculate the annual depreciation for 2016, 2017, and 2018 assuming they were all purchased June 1st, 2016. Show all of your work.

Cost $75,000; Salvage value: $10,000; Useful life: 10 Calculate annual depreciation on this machi... Cost $80,000;...

Cost $75,000; Salvage value: $10,000; Useful life: 10 Calculate annual depreciation on this machi... Cost $80,000; Salvage value: $10,000; Useful life: 10 Calculate annual depreciation on this machinery using doublr-declining balance method. Be careful not to exceed the salvage value. If the salvage value is zero, switch to straightline in the year when straight-line yields higher depreciation. (use the remaining valye as the starting point when you change)

How can the selection of useful life and salvage value affect the financial statements?

Equipment with a ten-year estimated useful life and no salvage value is sold at the end...

Equipment with a ten-year estimated useful life and no salvage value is sold at the end of the third year of its useful life. How would using the straight-line method of depreciation instead of the double-declining balance method of depreciation affect revenues and expenses?

Consider the following two alternatives that have no salvage value: A B Initial Cost $15,000 $5,100...

Consider the following two alternatives that have no salvage value: A B Initial Cost $15,000 $5,100 Uniform Annual Benefits $3,000 $1,800 Useful life, in years 8 4 a) If the MARR is 10%, which alternative is preferred? b) Determine the ranges of MARR rate within which 1) A is preferred; 2) B is preferred and 3) Neither alternative should be chosen. Justify your answer through rate of return and incremental analysis.

Consider an asset with the cost basis of $500,000, useful life of 5 years and salvage...

Consider an asset with the cost basis of $500,000, useful life of 5 years and salvage value of 10,000 at the end of its useful life. This asset generates yearly revenue of $275,000 and its operating cost is $55,000 per year. Average inflation rate is estimated to be 4% over the next 5 years. Calculate tax saving in year 2 due to depreciation; if the double declining method is used for depreciation (tax rate is 30%). (Report your answer in...

A machine with an original cost of $120,000 and no salvage value had an estimated useful...

A machine with an original cost of $120,000 and no salvage value had an estimated useful life of 6 years, but after 2 complete years, management decided that the orignal estimate of useful life should have been 8 years. Using a T-Chart template, prepare the following entries: A. Depreciation for Year 1 B. Depreciation for Year 2 C. Depreciation for Year 3

Subjects