Question: Compute the present equivalent cost (present value) of a machine tool that costs $10,000. initially plus $500. for annual maintenance. The estimated life of the

Compute the present equivalent cost (present value) of a machine tool that costs $10,000. initially plus $500. for annual maintenance. The estimated life of the tool is 20 years, and its estimated salvage value at that time is $3000. The interest rate is 12.0%. ($13,424) If it is expected that the machine tool will produce $2500. annual income, what is the present value of the investment at 12.0%?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

12.6 Compute the present equivalent cost of a machine tool that costs $10,000 initially plus $500 for maintenance every year. The estimated life of the tool is twenty years and its estimated salvage...

Hello i have 4 questions please answer it with complete a nd clear solution. Thankyou!!! 1) A newly-built business property, containing space for a store and two offices, can be purchased for P1,...

Eddie s Precision Machine Shop is insured for $ 7 0 0 , 0 0 0 . The present yearly insurance premiums ( i . e . , what the shop pays for insurace coverage ) is $ 0 . 9 8 per $ 1 0 0 of coverage. A...

ABC Company is considering the purchase of a new bottling machine that operates at twice the speed of the present equipment. It costs $75,000 (minus), has an estimated life of 20 years. and a salvage...

Management accounting assignment: Write a critique with reference list. Please help me write something as much as you could. Analysing technology investmentsfrom NPV to Strategic Cost Management...

1. You have been asked by the president of your company to evaluate the proposed acquisition of a new special-purpose truck for $60,000. The truck falls into the MACRS 3-year class, and it will be...

ABC Corp. is considering the purchase of another machine as an alternative to Project A. Calculate the NOCFS for Project B. j. The cost of the new machine is $300,000. k. Delivery and Installation...

The Northern Namibia State University Ltd (NNSU) is a private university located in Rundu. Rundu is situated on the south banks of Okavango River which is in the northeast of Namibia, and serves as a...

Replacement Decision for Railway Equipment Suppose the Burlington Northern Railway is considering replacement of a power jack tamper, used for maintenance of track, with a new automatic raising...

1 5.88 pts Two products emerge from a joint process. What would be the financial impact if a product is processed further and sold (instead if being sold at the split-off point)? Product has been...

Define control chart for forecast errors. What is the purpose of establishing control limits for forecast errors?

b) Find the square roots of - 15 8 i (5 Marks) c) What is the product of the square roots of -15 - 8i found in part b? (5 Marks) d) What is the sum of the square roots of -15 - 8i found in part b?...

How can operations management decisions influence the overall strategic objectives of an organization? Question 4 Answer a . By avoiding alignment with strategic goals b . By ignoring resource...

Compute the NPV statistic for Project Y if the appropriate cost of capital is 11 percent. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your...