Reference no: EM132208972

1. A grader costs $350,000 to purchase and is expected to have a useful life of 8 years. Annual operating and maintenance costs are estimated to be $35,000 per year, and the salvage value after 8 years of use is estimated to be $50,000. At an interest rate of 9%, what is the present worth equivalent cost to the contractor of owning and operating the grader?

2. A project has a first cost of $120,000 and an estimated salvage value after 25 years of $20,000. Estimated average annual receipts are $25,900; estimated average annual disbursement are $15,060. Assuming that annual receipts and disbursements will be uniform, compute the prospective rate of return.

3. A loader has an initial cost of $154,000 and an estimated useful life of 8 years. The salvage value after 8 years of use is estimated to be $10,000. a. What is the annual depreciation amount if the straight-line method of depreciation accounting is used? b. What is the book value after 6 years if the straight-line method of depreciation accounting is used? c. What is the annual depreciation amount in the fifth year if the sum-of-the-years method of depreciation accounting is used? d. What is the book value at the end of the sixth year if the sum-of-the-years method of depreciation accounting is used? e. What is the annual depreciation amount in the fourth year if the double-declining-balance method of depreciation accounting is used? f. Assume this loader has a recovery period of 5 years in The Modified Accelerated Cost Recovery System (MACRS), list annual depreciation amount and book value for every depreciable year. (Annual depreciate rate is given in the following table)