Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following: Machine A could be purchased for $15,000. It will last 10 years with annual maintenance costs of $500 per year. After 10 years the machine can be sold for $1,575. Machine B could be purchased for $12,500. It also will last 10 years and will require maintenance costs of $2,000 in year three, $2,500 in year six, and $3,000 in year eight. After 10 years, the machine will have no salvage value. Required: Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations. Calculate the present value of Machine A & Machine B. Which machine Esquire should purchase? Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Machine A Machine B Esquire should purchase PV Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following: Machine A could be purchased for $15,000. It will last 10 years with annual maintenance costs of $500 per year. After 10 years the machine can be sold for $1,575. Machine B could be purchased for $12,500. It also will last 10 years and will require maintenance costs of $2,000 in year three, $2,500 in year six, and $3,000 in year eight. After 10 years, the machine will have no salvage value. Required: Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations. Calculate the present value of Machine A & Machine B. Which machine Esquire should purchase? Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Machine A Machine B Esquire should purchase PV
Expert Answer:
Answer rating: 100% (QA)
To determine which machine Esquire should purchase we need to calculate the present value of each ma... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
Students also viewed these accounting questions
-
How do accounting accrual adjustments affect covenants that require minimums for retained earn-ings or for certain ratios such as the current ratio? Are those effects permanent? b. How do real...
-
Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the...
-
Laval produces lighting fixtures. Budgeted Information for Its two production departments follows. The departments use machine hours (MH) and direct labor hours (DLH). Overhead cost Direct labor...
-
In Section 20.9, in order to find the energy stored in an inductor, we assumed that the current was increased from zero at a constant rate. In this problem, you will prove that the energy stored in...
-
The Radiology Department at St. Josephs Hospital, a not-for-profit, is considering purchasing a magnetic resonance imaging (MRI) machine. The cost to purchase and install an MRI is approximately...
-
Refer to the information in QS 13-4. Use that information for Tide Corporation to determine the 2016 and 2017 common-size percents for cost of goods sold using net sales as the base. Data From QS...
-
The Bonita Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $60 a night. Operating costs are as follows. Salaries ...... $8,800 per month Utilities ..... 2,400...
-
Prove that the series (1+3i)" zn n= 4" n ln (n) converges for all z such that || 2. Here In: (0, ) R is the natural logarithm.
-
Consider the following 0x86 program: .data array DWORD 1,2,3,4,5,6,7,8,9 aravSize -(S-array)/4 ; array .code main PROC mov ecx,arraySize-1 mov esi.OFFSET array L1: mov eax. [esi] sda mov bx,2 idiv bx...
-
A +4.0-C charge is placed on the x axis at x = +3.0 m, and a -2.0-C charge is located on the y axis at y = -1.0 m. Point A is on the y axis at y = +4.0 m. Determine the electric potential at point A...
-
How do you check for accounts with a UID of 0 at the terminal?
-
A 0.800 kg hammer is moving horizontally at 9.50 m/s when it strikes a nail and comes to rest after driving it 1.00 cm into a board. A. Calculate the duration of the impact in seconds. B. What was...
-
Which lines of the code below represents the base case of the recursion? def tree op (fn, t): #1 #2 #3 if type (t) !=type ([]): return t left = tree op (fn, t[0]) right tree op (fn, t[1]) return fn...
-
a. Explain how you can tell if an expression is a tautology, a contradiction, or neither? b. Make a truth table for ALL possible cases of this logical expression: P^(-(QVR)) c. Is it a tautology, a...
-
Identify 3 controversial issues in todays media. Select a news article from the past six months that covers each topic. For each, identify what kind of argument (stasis) is made in each story and, in...
-
In Exercises, find the equation of the tangent line at the given point on each curve. 2y 2 - x = 4; (16, 2)
-
The figure below illustrates a thin plate of thickness \(t\). An approximate displacement field, which accounts for displacements due to the weight of the plate, is given by a. Determine the...
-
For a plane stress problem, the strain components in the xyplane at a point \(P\) are computed as: a. Compute the state of stress at this point if Young's modulus \(E=2 \times 10^{11} \mathrm{~Pa}\)...
-
The stress matrix at a particular point in a body is Determine the corresponding strain if \(E=20 \times 10^{10} \mathrm{~Pa}\) and \(v=0.3\). -2 1-3 [0] = 104 -345 107 Pa.
Study smarter with the SolutionInn App