Acme will not perform any maintenance operations

Assignment Help Accounting Basics

Reference no: EM131018232

Acme Produce, Inc. wishes to buy a potato processing unit for their plant. Acme's engineers have negotiated a contract that covers the annual maintenance costs for the first two years, with Acme incurring annual maintenance costs beginning at the end of year 3. Acme's engineers estimate that the annual maintenance will cost $45,000. If the installation cost (including purchase price) for the unit is $140,000, what is the present value of the machine?
You are to assume

? Acme will maintain the machine for 8 years after its installation (including the two years covered by the manufacturer) and then the machine will be discarded, with zero value.

? Acme will not perform any maintenance operations in the 8th year.

? Acme's MARR is 15%.

Reference no: EM131018232

Questions Cloud

Identify potential products or services : Based on your selected country (India) identify 3 potential products or services that could be provided in the countries based on existing and projected demand conditions.

What is the equilibrium short run price : In the short run, there are two identical firms. What is the equilibrium short run price

Potential dangers of unlicensed daycares : You have selected an issue that speaks strongly to you - Article - Potential dangers of unlicensed daycares

What is the operational and the investing cash flow : Indirect method cash flow/cash flow statement: What is the operational cash flow? What is the investing cash flow? What is the financing cash flow?

Acme will not perform any maintenance operations : Acme will maintain the machine for 8 years after its installation (including the two years covered by the manufacturer) and then the machine will be discarded, with zero value.

Find a problem in managing operations and supply chains : Find a problem in managing operations and supply chains from the real business world (from work or from any business articles/cases) - Identify specific OSCM concepts/tools that can be applied to the problem

Mike cichanowski founded wenonah conie : Mike Cichanowski founded Wenonah Conie, and later purchased Current Designs a company that designs and manufactures kayaks.

Describe the shape of the distribution of the bank branch : Explain why you would think that the shape you describe above in a) happens with this type of data.The type of data is a collection of waiting times at a local bank in a commercial district during a lunch time. If you were one of these customers,..

Which of the following is not a parasympathetic effect : The figure illustrates the parasympathetic division. What does "E" represent?

User Account

All Pages