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Novay_Z [31]
3 years ago
6

Annual maintenance costs for a particular section of highway pavement are $2500. The placement of a new surface would reduce the

annual maintenance cost to $500 per year for the first 3 years and to $1000 per year for the next 7 years. After 10 years the annual maintenance would again be $2500. If maintenance costs are the only saving, what investment can be justified for the new surface? Assume interest at 5%.
Business
1 answer:
rewona [7]3 years ago
6 0

Answer:

The maximum investment is $6,360.111

Explanation:

Giving the following information:

The placement of a new surface would reduce the annual maintenance cost to $500 per year for the first 3 years and to $1000 per year for the next 7 years. After 10 years the annual maintenance would again be $2500.

We need to find the net present value. The maximum initial investment will be the amount that makes the NPV cero.

NPV=∑[Cf/(1+i)^n]

Cf= cash flow

<u>For example:</u>

Year 1= 500/1.05= 476.19

Year 3= 500/1.05^3= 431.92

Year 5= 1,000/1.05^5= 783.53

NPV= 6,360.111

The maximum investment is $6,360.111

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A: There is no age limit for disbursement of funds
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Accrued salaries payable of $100000 were not recorded on December 31, 2017. Office supplies on hand of $57000 on December 31, 20
Dennis_Churaev [7]

Answer:

In 2017

Net Income and Retained Earning are overstated by $100,000

Expenses and Payables are understated by $100,000.

In 2018

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Expenses are overstates by $57,000

Explanation:

Accrued Salaries is Recorded as follow

Dr. Salaries Expense

Cr. Salaries Payament

Non recording of this entry will result in understatement of Expenses and Payables by $100,000 over statement of Net income and retained earning by the same amount.

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7 0
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In the for-profit business world, decisions to spend money must pass a "cost versus benefit" test, but for nonprofit arts organi
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The cost versus benefit test will not act as a good factor to measure tangible achievement.      

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3 0
3 years ago
On June 30, 2020, Sage Company issued $3,551,000 face value of 13%, 20-year bonds at $3,818,140, a yield of 12%. Sage uses the e
Lubov Fominskaja [6]

Answer: See attachment

Explanation:

The journal entry to record the transactions has been attached.

1. The issuance of the bonds on June 30, 2020.

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Credit Bonds payable $3551000

(2) The payment of interest and the amortization of the premium on December 31, 2020.

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Debit Premium on bonds payable $1726.6

Credit Cash $230815

(3) The payment of interest and the amortization of the premium on June 30, 2021.

Debit Interest expense $228984.8

Debit Premium on bonds payable $1830.2

Credit Cash $2380815

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Debit Interest expense $228975

Debit Premium on bonds payable $1940

Credit Cash $230815

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