What is the annual cost of owning the excavator

Assignment Help Financial Management
Reference no: EM131991142

Gifted heart construction company obtained a loan from bay area bank at an interest rate of 10% to purchase an excavator for $550,000. The tires will be replaced at a cost of $80,000 and the engine would be refurbished at a cost of $50,000 in year 5. The salvage value of the excavator after 10 years of use in construction projects would be $75,000.

a) What is the annual cost of owning the excavator?

b) What is the future cost 6 years from now?

Reference no: EM131991142

Questions Cloud

What were her total interest charges : Mel Blanc bought a new dining room set for $6,600. What were her total interest charges ?
Engineering firm realizes that new machine : An engineering firm realizes that a new machine will be needed in five years.
Would company prefer to use macrs : Would a company prefer to use MACRS or straight line depreciation. Be sure to justify your position.
What is the discounted payback period of the project : what is the discounted payback period of the project? If the required payback period is 3 years, should you accept it?
What is the annual cost of owning the excavator : What is the annual cost of owning the excavator? What is the future cost 6 years from now?
Considering investing in new chile trash project : Valles Global Industries is considering investing in a new chile trash project in Durango, MX.
Project analyst for new project in your company pipeline : Your boss has assigned you as Project Analyst for a new project in your company’s pipeline.
Calculate the npv for this project : ZTX Co. has decided to sell a new line of golf clubs. The tax rate is 35 percent, and the cost of capital is 15 percent. Calculate the NPV for this project.
Example of risk faced by government stakeholders : Give an example of a risk faced by government stakeholders?

Reviews

Write a Review

Financial Management Questions & Answers

  Determine the weighted average cost of capital

Determine the Weighted Average Cost of Capital (WACC) and then discount the free cash flows that you will determine after applying the growth.

  How much will earnings grow over the year

A firm is financing its growth with retained earnings. It is retaining 80 percent of its annual earnings. The firm's historic return on equity is 16 percent, a figure that is expected to continue into the future. How much will earnings grow over the ..

  Needed to purchase one new share of stock in this offering

A.K. Stevenson wants to raise $10 million through a rights offering. The subscription price is set at $10. Currently, the company has 2.2 million shares outstanding with a current market price of $11.76 a share. Each shareholder will receive one righ..

  Fixed assets and net operating working capital

Smith Corporation’s income statement for the year 2012 is given below: Sales $17,000,000 Operating costs excluding depreciation 9,000,000 EBITDA $ 8,000,000 Depreciation 1,000,000 EBIT $ 7,000,000 Interest 1,000,000 EBT $ 6,000,000 Taxes. Calculate S..

  Net advantage-disadvantage of re-working the keyboards

What is the net advantage or disadvantage of re-working the keyboards?

  How much will you pay in capital gains taxes

If you buy a home for $100,000 Mortgage, Insurance & Taxes costs you $1,000 a month Your Mortgage interest rate is 4% and you had a down payment of $3,000 It costs you roughly $3,000 a year for maintenance and upkeep. You sell your home after 5 years..

  What was her net worth at the end of the year

During the year she set aside $100 per month from her paycheck for savings and borrowed $500 from her cousin that she must pay back in January of next year. What was her net worth at the end of the year?

  From strict valuation standpoint

The required return on this stock is 20 percent. From a strict valuation standpoint, should Jane buy the stock?

  Which alternative is more attractive

If you can borrow funds from a bank at 26 percent compounded daily, Based on the findings above, which alternative is more attractive?

  Comparing two different capital structures-levered plan

Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 795,000 shares of stock outstanding. Use M&M Proposition I to find the price per share of e..

  What is the value of option to abandon

What is the value of the option to abandon?

  What is the net impact on year one net income

HD Company sells goods to a Spanish customer at a price of 1 million euros. What is the net impact on Year 1 net income?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd