1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Aleks [24]
3 years ago
14

A job can be done with Machine A that costs $12,500 and has annual end-of-year maintenance costs of $5000; its salvage value aft

er 3 years is $2000. Or the job can be done with Machine B, which costs $15,000 and has end-of-year maintenance costs of $4000 and a salvage value of $1500 at the end of 4 years. These investments can be repeated in the future, and your work is expected to continue indefinitely.
Use present worth, annual worth, and capitalized cost to compare the machines. The interest rate is 5%/year.
Business
1 answer:
sdas [7]3 years ago
3 0

Answer and Explanation :

As per the data given in the question,

Present value = Amount ÷ (1 + r)^n

Machine A

Year           Amount        Discount Factor      PV

1                  $5,000           1.05                  $4,761.90

2                $5,000                                     $4,535.15

3               $5,000                                      $4,319.19

Total                                                          $13,616.24

Now

Present value of salvage value =$2,000 ÷ 1.05^3 = $1,727.68

Present worth of Machine A is

= -$12,500 - $13,616.24 + $1,727.68

= -$24,388.56

Similarly Present worth of Machine B = -$15,000 - $4,000 ÷ 1.05 -$4,000 ÷ (1.05)^2 - $4,000 ÷ 1.05^3 - $4,000 ÷ 1.05^4 + $1,500 ÷ 1.05^4

=-$24,658.94

Based on the comparison between Machine A and Machine B

Machine A is better because it has higher present worth

Annual worth:

For machine A = -$12,500(A/PA,5%,3) -$5,000+$2,000(A/F,5%,3)

=-$12,500 × 0.367 - $5,000 + $2,000 × 0.317

= -$8,953.5

For Machine B:

=  -$15,000(A/P,5%,4) - $4,000 + $1,500(A/F,5%,4)

= -$7,882.16

Based on the comparison between Machine A and Machine B

Machine B is better because it has higher annual worth

Capitalized cost:

Machine A :

= -$12,500+$2,000(P/F,5%,3) - $5,000 ÷ 0.05

=  -$12,500 + $2,000 × 0.86 - $5,000 ÷ 0.05

= -$110,772

Machine B :

=-$15,000(P/F,5%,4) - $4000 ÷ 0.05

=-$15,000 × 0.82 - $4,000 ÷ 0.05

= -$93,765.9

Based on the comparison between Machine A and Machine B

Machine B is better because it has lower capitalized cost

You might be interested in
A fundamental analysis is reviewing a corporation's income statement. For the period, the company reported net sales of $10 mill
Delicious77 [7]

Answer:

the company's cash flow from operations was $2,500,000.

Explanation:

<u>Calculation of cash flow from operations </u>:

Net Sales                              $10,000,000

Less Cost of Goods Sold    ($6,000,000)

Gross Profit                            $4,000,000

Less Expenses :

Depreciation expense         ($1,000,000)

Interest on long-term debt  ($1,000,000)

Income tax expenses             ($500,000)

Operating Profit / (Loss)         $1,500,000

Add Back Depreciation         $1,000,000

Operating Cash flow             $2,500,000

5 0
3 years ago
If sales are $1,150,000 in 2016 and this represents a 15% increase over sales in 2015, what were sales in 2015?
frutty [35]
Take $1,150,000 multiply by 15% to get the money increase between 1 years which is $172500 then take $1,150,000 subtract by $172,500 to get the final sales in 2015 which is $977,500
5 0
3 years ago
Buzz Appliances manufactures two​ products: Food Processors and Espresso Machines. The following data are​ available:
murzikaleks [220]

Answer

D. 4,800 Espresso Machines and 0 Food Processors

The answer and procedures of the exercise are attached in a microsoft excel document.  

Explanation  

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.  

4 0
3 years ago
In the treatment of U.S. exports and imports, national income accountants _____. rev: 04_09_2018 Multiple Choice subtract export
pogonyaev

Answer:

The correct answer is: add exports but subtract imports in calculating GDP.

Explanation:

National income refers to the production of goods and services by the residents of a nation within the geographical boundaries of a nation in a given period.

In the calculation of national income, net exports are included. This net export is the difference between exports and imports. In other words, we can say that exports are added and imports are included.

6 0
2 years ago
You bought a car for $17,250. You put down $3,000 cash and have to take a loan out to pay for the rest. The car dealership is of
LuckyWell [14K]

Answer:

Interest will be $855 x 10 years= $8,550

Explanation:

Interest

6÷100=0.06

0.06x14,250=$855

$855x10=$8,550.

How much to have paid back

At the end of 10years $8,550 would have been paid as interest

Total sum will be $14,250+$8,550=$22,800 to be paid back.

8 0
3 years ago
Other questions:
  • The ________ of focus group participants should be judged against the target market profile to assess to what degree the groups
    6·2 answers
  • Nick Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity
    6·1 answer
  • Who among the following is associated with contributions to quality control in operations management? Henry Ford Charles Babbage
    15·1 answer
  • Business incubators will help new startup enterprises with regulatory compliance. true false
    7·2 answers
  • Naomi and Matt received the following amounts from a tenant who is renting their condominium during the current year (rent is $1
    8·1 answer
  • What type of integration best describes the type of organization bp is?
    9·1 answer
  • Legal obligations that carry punishments, if not followed, are ____?
    12·1 answer
  • Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services are described b
    10·1 answer
  • Ace Credit Card Company agrees to transfer cash to Seller Company deposit of that company's credit card sales sales. If Seller C
    9·1 answer
  • Derek, a single taxpayer, has agi of $55,200 which includes $5,000 of qualified dividends. derek does not itemize deductions. wh
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!