Question
In: Accounting
"A new asset is available for $236,000. O&M costs are $10,000 each year for the first...
"A new asset is available for $236,000. O&M costs are $10,000 each year for the first five years, $13,300 in year six, $19,300 in year seven, and $28,800 in year eight. Salvage values are estimated to be $144,000 after one year and will decrease at the rate of 49% per year thereafter. At a MARR of 10%, determine the economic service life of the asset. Enter your answer as an integer from 1 to 8."
Answer is 8
Solutions
ekkarill92 answered 2 years agoRelated Solutions
A new asset is available for $239,000. O&M costs are $24,000 each year for the first...
A new asset is available for $239,000. O&M costs are $24,000
each year for the first five years, $37,680 in year six, $57,700 in
year seven, and $88,300 in year eight. Salvage values are estimated
to be $198,000 after one year and will decrease at the rate of 17%
per year thereafter. At a MARR of 12%, determine the economic
service life of the asset. Enter your answer as an integer from 1
to 8.
A new asset is available for $227,000. O&M costs are $34,000 each year for the first...
A new asset is available for $227,000. O&M costs are $34,000
each year for the first five years, $51,000 in year six, $79,100 in
year seven, and $121,800 in year eight. Salvage values are
estimated to be $204,000 after one year and will decrease at the
rate of 50% per year thereafter. At a MARR of 18%, determine the
economic service life of the asset. Enter your answer as an integer
from 1 to 8
"A new delivery truck is available for $200,000. O&M costs are $21,000 each year for the...
"A new delivery truck is available for $200,000. O&M costs
are $21,000 each year for the first five years, $33,600 in year
six, $52,100 in year seven, and $81,300 in year eight. Salvage
values are estimated to be $150,000 after one year and will
decrease at the rate of 17% per year thereafter. At a MARR of 17%,
determine the economic service life of the truck. Enter your answer
as an integer from 1 to 8."
A new asset has been proposed to your company: Year Investment O & M Costs Salvage...
A new asset has been proposed to your company:
Year
Investment
O & M Costs
Salvage Value
0
$14,000
1
$3,400
$8,000
2
$4,600
$6,000
3
$5,800
$4,000
4
$7,200
$2,000
5
$8,300
0
How long should the asset be kept? Use a MARR of 12%.
Some factory equipment was bought at a cost of $100,000. The O&M costs for the first...
Some factory equipment was bought at a cost of $100,000. The
O&M costs for the first year were $10,000 and they are expected
to increase by $2,500 per year thereafter. The market value of the
equipment declines by 15% per year over its 5-year life. What is
the minimum cost life for this equipment? Assume MARR = 4%.
Group of answer choices
5 years
3 years
2 years
4 years
The owner of a bicycle repair shop forecasts revenues of $236,000 a year. Variable costs will...
The owner of a bicycle repair shop forecasts revenues of
$236,000 a year. Variable costs will be $69,000, and rental costs
for the shop are $49,000 a year. Depreciation on the repair tools
will be $29,000. The tax rate is 40%.
a.
Calculate operating cash flow for the year by using all three
methods: (a) adjusted accounting profits; (b) cash inflow/cash
outflow analysis; and (c) the depreciation tax shield approach.
Method
Operating Cash Flow
Adjusted accounting profits
$
Cash inflow/cash...
The owner of a bicycle repair shop forecasts revenues of $236,000 a year. Variable costs will...
The owner of a bicycle repair shop forecasts revenues of
$236,000 a year. Variable costs will be $69,000, and rental costs
for the shop are $49,000 a year. Depreciation on the repair tools
will be $29,000. The tax rate is 40%.
a.
Calculate operating cash flow for the year by using all three
methods: (a) adjusted accounting profits; (b) cash inflow/cash
outflow analysis; and (c) the depreciation tax shield approach.
Method
Operating Cash Flow
Adjusted accounting profits
$
Cash inflow/cash...
Alternative R has a first cost of $88,000, annual M&O costs of $62,000, and a $20,000...
Alternative R has a first cost of $88,000, annual M&O costs
of $62,000, and a $20,000 salvage value after 5 years. Alternative
S has a first cost of $175,000 and a $58,000 salvage value after 5
years, but its annual M&O costs are not known. Determine the
M&O costs for alternative S that would yield a required
incremental rate of return of 23%. The M&O cost for alternative
S is $
A machine cost $30,000 initially and has no salvage value. The O&M costs in year 1...
A machine cost $30,000 initially and has no salvage value. The
O&M costs in year 1 were $10,000 and have been increasing by
$2,000 from year 2. The minimum cost life of this machine for a
MARR of 10 %. (show your solution)
A. 4 years
B. 2 years
C. 6 years
D. None of above
States Probability Asset M Return Asset N Return Asset O Return Boom 34% 12% 21% 4%...
States
Probability
Asset M Return
Asset N Return
Asset O Return
Boom
34%
12%
21%
4%
Normal
51%
10%
14%
10%
Recession
15%
4%
1%
12%
Benefits of diversification. Sally Rogers has decided to invest
her wealth equally across the following three assets:
a. What are her expected returns and the risk from her
investment in the three assets? How do they compare with investing
in asset M alone?
Hint: Find the standard deviations of asset M and of the...
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