What is the best option for a construction company

Reference no: EM131086409

A construction company specialised in motor highway construction has to decide whether to restore a "tractor with scraper" or to replace it with a new one. Five years ago the existing "tractor with scraper" was bought for $ 52000 with an expected lifetime of 15 years. At the time of the sale the salvage value was estimated $ 3700. If the company would sell the "tractor with scraper" now, the trade in value would be $ 22000. The restore costs of the current machine are $ 7400. After the restoration, the yearly operating cost will be $ 5950. The salvage value in 10 years from now will be $ 2980. A "tractor with scraper" can be bought for $ 59500. The yearly operating cost is $ 3700. The salvage value in 10 years from now is $ 30000. The minimum required rate of return by the company is 10 %. What is the best option?

Reference no: EM131086409

Questions Cloud

What is the yield to maturity of bond : 1. A Japanese company has a bond outstanding that sells for 94 percent of its ¥100,000 par value. The bond has a coupon rate of 6.1 percent paid annually and matures in 17 years. What is the yield to maturity of this bond?

What is project npv if the discount rates : What is project NPV if the discount rates are 5% and 18% (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in billions rounded to 3 decimal places.)

Which of the following is not method of qualitative analysis : Which of the following is NOT considered constitutive of a social problem (rather than an individual problem)?

Understanding of the uses of financial statement : The goal of this assignment is to expand your understanding of the uses of financial statement information. This project is based on the information provided in Ch. 4. We will examine the financial performance of McDonald's and one of its competit..

What is the best option for a construction company : The salvage value in 10 years from now is $ 30000. The minimum required rate of return by the company is 10 %. What is the best option?

Identify the function of the problem behavior : Describe at least one intervention to reduce the instances of problem behavior. Identify one alternative behavior that Tracey will learn to replace the need to engage in the problem behavior.

Appropriate opportunity cost of capital : There is a 50% chance that the bond will repay its full face value and a 50% chance that the bond will default and that you will receive $700. If the appropriate opportunity cost of capital is 5%, then the price of the bond is closest to?

Structure weights on a book value basis : What are the company's capital structure weights on a book value basis? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

How decision making process related to group decision making : How is the decision making process related to group decision making in human services such as a governing board of an organization making a decision about an infraction by one of the clinicians?

User Account

All Pages