An irrigation company has a pump bought at the end of year 2018 (three years back)...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
An irrigation company has a pump bought at the end of year 2018 (three years back) with the cost of RM100,000. This old pump is estimated could be used up to year 2025 or it can be sold this year and replaced by a new eco-friendly pump. The price of new eco-friendly pump is RM90,000. The market value (MV) and operating and maintenance (O&M) costs from year 2019 until year 2025 have been presented in Table 4(b) with the MARR of 8%. The company would like to make the assessment on this year (2021). Year 2019 2020 2021 2022 2023 2024 2025 Table Q4(b): MV and O&M costs from year 2019-year 2025 New Eco-friendly Pump Old Pump MV at EOY O&M Cost (RM) (RM) MV at EOY (RM) 95,000 85,000 73,000 60,000 40,000 20,000 10,000 O&M Cost (RM) 10,000.00 12,000.00 15,000.00 20,000.00 30,000.00 45,000.00 48,000.00 90,000 80,000 75,000 70,000 65,000 11,000 11,500 12,500 14,500 (i) (ii) Assess the economic life of the new eco-friendly pump with detailed steps of calculation. (12 marks) Evaluate the year of the old pump should be replaced. (3 marks) An irrigation company has a pump bought at the end of year 2018 (three years back) with the cost of RM100,000. This old pump is estimated could be used up to year 2025 or it can be sold this year and replaced by a new eco-friendly pump. The price of new eco-friendly pump is RM90,000. The market value (MV) and operating and maintenance (O&M) costs from year 2019 until year 2025 have been presented in Table 4(b) with the MARR of 8%. The company would like to make the assessment on this year (2021). Year 2019 2020 2021 2022 2023 2024 2025 Table Q4(b): MV and O&M costs from year 2019-year 2025 New Eco-friendly Pump Old Pump MV at EOY O&M Cost (RM) (RM) MV at EOY (RM) 95,000 85,000 73,000 60,000 40,000 20,000 10,000 O&M Cost (RM) 10,000.00 12,000.00 15,000.00 20,000.00 30,000.00 45,000.00 48,000.00 90,000 80,000 75,000 70,000 65,000 11,000 11,500 12,500 14,500 (i) (ii) Assess the economic life of the new eco-friendly pump with detailed steps of calculation. (12 marks) Evaluate the year of the old pump should be replaced. (3 marks)
Expert Answer:
Answer rating: 100% (QA)
The present value of the new pump would be PV 95000 85... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
In taking a physical inventory at the end of year 2011, Nadir Company forgot to count certain units. Explain how this error affects the following: (a) 2011 cost of goods sold, (b) 2011 gross profit,...
-
In taking a physical inventory at the end of year 2009, Pea Company erroneously forgot to count certain units. Explain how this error affects the following: (a) 2009 cost of goods sold, (b) 2009...
-
In taking a physical inventory at the end of year 2013, Grant Company forgot to count certain units. Explain how this error affects the following: (a) 2013 cost of goods sold, (b) 2013 gross profit,...
-
Pty is in the process of developing several new products. One of them is innovative gymnastic equipment. The estimated labour time for the first unit is 12 hours but a learning curve of 80% is...
-
Given here are the data for a dependent variable, y, and independent variables. Use these data to develop a regression model to predict y. Discuss the output. Which variable is an indicator variable?...
-
Consider again the problem of Kenora Competition-free Concrete in worked-out problem 17.2 (page 624). Suppose that Kenora's marginal cost is MC = 20 + 0.02Q. What are its profit-maximizing sales...
-
The balance sheet of Oriental Rug Company at December 31, 2008, included the following stockholders' equity: During 2009, Oriental Rug completed the following selected transactions: Requirements 1....
-
A by- product of phosphate fertilizer production is pyrite waste, which contains arsenic and lead. From 1884 to 1906, seven phosphate fertilizer plants operated on a forty- three- acre operated on a...
-
Rock Incorporated has three divisions, Granite, Lime and Nina. All fixed costs are common and unavoidable. Following is the income statement for the previous year: Granite Lime Nina Total Sales...
-
The following information, taken from the books of Herman Brothers Manufacturing represents the operations for January: The job cost system is used, and the February cost sheet for Job M45 shows the...
-
A bond portfolio has a current market value of $500,000,000. The average portfolio duration is 5 years. Current rates are 4%. Rates are expected to fall 0.5% over the next 12 months. Use the duration...
-
All transactions below relate to Biancardi Construction Ltds uncollectable accounts for the financial year ended 30 June 2019. Ignore GST. The Accounts Receivable account had a balance at 30 June...
-
With three school-age children, the youngest of whom was just seven, the Dupont family was nervous about their proposed relocation from Paris, France to Singapore. The move represented an opportunity...
-
The accountant for Debbies Dance Ltd prepared an ageing analysis of accounts receivable balances at 30 June 2019 as set out below. The percentages of each age group are based on past experience and...
-
Alicia Clegg March 30, 2017 As the appetite for cross-border deals increases, business schools are mining insights from corporate couplings that prospered against the odds, in the hope that they hold...
-
OMalley and OReilly formed a partnership on 1 July 2019 to run an information systems consultancy business by investing $400 000 and $360 000 respectively. Both partners work similar hours in the...
-
Starter code is available here: https://github.com/ucsd-cse11-su222/cse11-pa8-starter Comparators and Lists The Comparator interface in Java describes operations that compare two values of the same...
-
Suppose you won a financial literacy competition and are given FJS10000 to invest, with the condition that investment can be done either in, i) Invest in Unit trust of Fiji or Invest in Fijian...
-
White Ltd. has been negotiating with McCloud Ltd. for several months, and agreements have nally been reached for the two companies to combine. In considering the accounting for the combined entities,...
-
What type of organization would reflect collections on its financial statements?
-
The United Football League (UFL), a North American professional football league, has been in work stoppage since July 1, 2013, immediately after the six-week training camp ended. Faced with stalled...
-
An electronic instrument, of mass \(20 \mathrm{~kg}\), is to be isolated to achieve a natural frequency of \(15 \mathrm{rad} / \mathrm{s}\) and a damping ratio of 0.95. The available dashpots can...
-
A damped single-degree-of-freedom system has a mass \((m)\) of \(5 \mathrm{~kg}\), stiffness \((k)\) of \(20 \mathrm{~N} / \mathrm{m}\), and a damping constant \((c)\) of \(5 \mathrm{~N}-\mathrm{s} /...
-
A stepped bar, fixed at \(x=0\) and free at \(x=l\), has a cross-sectional area of \(2 A\) for \(0 \leq x
Study smarter with the SolutionInn App