Reference no: EM13768492

Question 1:

Depreciation Concept

1. Identify which of the following expenditures is considered as a capital cxpendilure that must be capitatied:

(a) Purchase land to build a warehouse at $300,000.

(b) Purchased a copy machine at $15,000.

(c) Installed a conveyor system at a cost of $55,000 to automate some part of production processes.

(d ) Painted the office building, both interior and exterior, at a cost of $22,000.

(e) Repaired the parking lot at a cost of $25,000.

(f) Installed a purified water fountain in the employee lounge at a cost of $3,000.

(g) Purchased a spare part for a stamping machine at a cost of $3800.

(h) Paid $12,000 to lease a dump truck for six months.

(i) Purchased a patent on an energy-saving device over five years at a cost of $30,000.

Question 2:

Three public investment alternatives are ;Available: A1 , A2, and A3 Their respective total benefits, costs, and first costs arc given in present worth as follows:

		Proposals
Present worth	A1	A2	A3
B	$400	$700	$500
I	$100	$300	$200
C	$100	$200	$150

These alternatives have the same service life. Assuming that there is no do nothing alternative, which project would you select, calculating on the basic of the benefit-cost ratio on incremental investment.

Question 3:

A local government is considering promoting tourism in the city. It will cost 55.000 to develop a plan. The anticipated annual benefits and costs are as follows:

Annual benefits: Increased local income and tax collections $117,400

Annual support service: Parking lot expansion. rest room $48,830

patrol car, and street repair

If the city government uses a discount rate of 6% and a study period of five Years, is this tourism project justifiable according to the benefit-cost analysis?