When should you buy the new equipment

Assignment Help Accounting Basics
Reference no: EM133186703

Question - When to replace an asset: You have old equipment for manufacturing company. The old equipment is expected to last for another three years, but you are considering buying a new equipment before the old wears out. The annual maintenance cost is $3.500 per year for the old and $2000 for the new. The price of your new equipment is $15,000 and it is expected to run for 18 years. Your opportunity cost of capital is 5 percent. When should you buy the new equipment? If the annual cost of old is instead $3200 what would be your decision? Show all working in details and justify your reasoning.

Reference no: EM133186703

Questions Cloud

What is the total current liabilities for bon nebo co : A quarterly tax payment will be made on April 15, 2022. What is the total current liabilities for Bon Nebo Co. on March 31, 2022
What is the adjusting journal entry on december : The unadjusted trial balance of ABC Company on December 31, 2019, end of its first year of operation, What is the adjusting journal entry on December
Analyse the ethically and politically charged nature : Analyse the ethically and politically charged nature of managerial work arising from responsibilities towards diverse stakeholder groups
What is your income using variable costing : The production is sold for P160 per unit. Variable commercial expenses are P20 per unit sold. What is your income using variable costing
When should you buy the new equipment : The annual maintenance cost is $3.500 per year for the old and $2000 for the new. When should you buy the new equipment
Explain how internally generated funds : Explain how internally generated funds are used to reduce the need for external financing to fund asset investments
What was the return on equity during the year : During the year sales were $5,000, net income, was $100, and paid taxes of $50. What was the Return on Equity during the year
Define sustainable practices : Define sustainable practices, and how can strategies in sustainability help you to educate children on the issues of sustainability
Simulate mostly physical layer procedures : Simulate mostly physical layer procedures, eg. channel coding and transport channels

Reviews

Write a Review

Accounting Basics Questions & Answers

  The financial statements of hudson manufacturing company

the financial statements of hudson manufacturing company report net sales of 500000 and accounts receivable of 50000

  Determine the unit product cost under variable costing

The Company produces 24,000 each month. Determine the unit product cost under variable costing and absorption costing

  Compute the lower-of-cost-or-net realizable value

Compute the lower-of-cost-or-net realizable value valuation for the company's total inventory

  Case - Voyages Soleil The Hedging Decision

Case - Voyages Soleil The Hedging Decision. Wait and exchange the Canadian dollars in October at the prevailing spot exchange rate at that time

  What are our journal entries

Assume that you own 40% of another company. The other company reports net income of $100,000 and pays out dividends of $80,000. What are our journal entries

  What nominal annual interest rate will you be earning

You will have P13,000 in your account. If the bank compounds interest monthly, what nominal annual interest rate will you be earning

  What is the result of after netting the transactions

There are no other transactions during the year. What is the result of after netting the transactions? $30,000 Long-term capital gain from the sale of Stock

  Computing costs for university cafe

The University Café has seen sales drop since classes have been scheduled during the noon hour and only 5 minutes between classes. Students don't have enough time to choose from the buffet line.

  How much is the capitalized cost of investment

P Company's ordinary shares were selling at P40 per share at the time of consummation of the combination. How much is the capitalized cost of investment

  How many units of Zbox are to be manufactured

Ardel Co. budgeted to sell 200,000 units of Zbox in September. How many units of Zbox are to be manufactured by Adel Co. during September

  Calculate minimum transfer price from the Bottle Division

Using the general rule, calculate the minimum transfer price from the Bottle Division to the Cologne Division. Explain your answer

  What is the correct amount of the check

What is the correct amount of the check Anne Teak's Knick Knack Store wrote to Shanda Lear's Lighting store on July 15

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