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rusak2 [61]
3 years ago
12

You are given the following information about equipment that is required for your business. Assume that the equipment will be re

placed as it wears out and that straight-line depreciation to zero is used for each. The required return is 15% and ignore taxes. Machine A has an initial cost of $200,000, an operating cost per year of $15,000, and an expected life of 8 years. Machine B has an initial cost of $300,000, an operating cost per year of $17,500, and an expected life of 10 years. How does the equivalent annual cost of Machine A compare to that of Machine B
Business
1 answer:
s2008m [1.1K]3 years ago
4 0

Answer:

Machine B EAC is $17,705.78 more than Machine A EAC.

Explanation:

First find the present values of the cost of both machines.

Machine A:

= 200,000 + (15,000 * Present value of annuity interest factor, 15%, 8 years)

= 200,000 + ( 15,000 * 4.4873)

= $‭267,309.5‬0

Machine B

= 300,000 + (17,500 * Present value of annuity interest factor, 15%, 10 years)

= 300,000 + 17,500 * 5.0188

= $‭387,829‬

Equivalent Annual cost Machine A:

= [(NPV * Required return) / 1 - (1 + Required return) ^–Number of Periods

=[(267,309.50 * 15%) / 1 - 1.15⁻⁸

= $59,569.95

Equivalent Annual cost Machine B:

= (387,829 * 15%) / (1 - 1.15⁻¹⁰)

= $77,275.73

Difference:

= 77,275.73 - 59,569.95

= $‭17,705.78‬

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Answer:

Poor management can affect the company's budget, employee turnover and overall profits. Finally, a decrease in productivity and morale are signs employees may be struggling with the leadership being given. If employees have an effective leader their task performance will continue to soar

Explanation:

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7 0
3 years ago
This table shows the CTSOs that four high school students are involved in: A 2-column table with 4 rows. Column 1 is labeled Stu
asambeis [7]

Answer: ELYSE. TSA. AFP. <—- the one that has that in the first Column

Explanation:

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4 0
3 years ago
Read 2 more answers
Nile Corp. has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:
True [87]

Answer:

Overheads cost allocated to Mossman Job  = $449

Explanation:

We have been provided the cost of each activity and their respective drivers.

There are three activities

Supervision of Direct Labor = $304,000 for 760,000 labor hours

Machine Maintenance = $153,600 for 960,000 hours

Facility rent = $165,000 for 110,000 square feet

Activities of Mossman Job and respective costs will be as follows:

Supervision of Direct Labor = $304,000/760,000 X 260 labor hours = $104

Machine Maintenance = $153,600/960,000 X 1,500 = $240

Facility Rent = $165,000/110,000 X 70 = $105

Net Overheads cost allocated to Mossman Job = $104 + $240 + $105 = $449

6 0
3 years ago
Following is information on an investment considered by Hudson Co. The investment has zero salvage value. The company requires a
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Hi I think that is 3.
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3 years ago
On June 10, Blossom Company purchased $7,100 of merchandise from Sunland Company, terms 4/10, n/30. Blossom Company pays the fre
Marysya12 [62]

Answer:

June 10

Dr Inventory $7,100

Cr Accounts payable $7,100

June 11

Dr Inventory $350

Cr Cash $350

June 12

Dr Accounts payable $600

Cr Inventory $600

June 19

Dr Account payable $6,500

Cr Cash $6,240

Cr Inventory $260

Explanation:

Preparation of a separate journal entries for each transaction on the books of Blossom Company.

Books of Blossom Company

June 10

Dr Inventory $7,100

Cr Accounts payable $7,100

June 11

Dr Inventory $350

Cr Cash $350

June 12

Dr Accounts payable $600

Cr Inventory $600

June 19

Dr Account payable $6,500

($7,100-$600)

Cr Cash $6,240

($6,500-$260)

Cr Inventory $260

(4%*$6,500)

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3 years ago
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