Mr.Andi plans to purchase a new printing machine. He has already received the offering from two printing vendors with the detailed quotation below. Vendor-1 Vendor-2 23.000.000 Initial Cost (IDR) Operation and Maintenance cost, (IDR/year) Salvage value (IDR) Life (years) -20.000.000 -8.500.000 1.000.000 6 -8.100.000 2.000.000 Assuming that Mr.Andi considers the MARR 10% per year, the business is expected to be eighteen years in service: (a) Based on a basis PW calculation, determine which vendor is expected to be considered by Mr.Andi. (b) All printing machines have a lifetime limitation of five years. Considering this situation, Mr. Andi has a standard practice of evaluating all options in line with that period. Assume that the salvage values are not expected to change, and If Mr.Andi uses a study period as exactly that period, which vendor should be chosen by Mr.Andi?

Mr.Andi plans to purchase a new printing machine. He has already received the offering from two printing vendors with the detailed quotation below. Vendor-1 Vendor-2 23.000.000 Initial Cost (IDR) Operation and Maintenance cost, (IDR/year) Salvage value (IDR) Life (years) -20.000.000 -8.500.000 1.000.000 6 -8.100.000 2.000.000 Assuming that Mr.Andi considers the MARR 10% per year, the business is expected to be eighteen years in service: (a) Based on a basis PW calculation, determine which vendor is expected to be considered by Mr.Andi. (b) All printing machines have a lifetime limitation of five years. Considering this situation, Mr. Andi has a standard practice of evaluating all options in line with that period. Assume that the salvage values are not expected to change, and If Mr.Andi uses a study period as exactly that period, which vendor should be chosen by Mr.Andi?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 9EB: Ronson recently purchased a new boat to help ship product overseas. The following information is...

See similar textbooks

Similar questions

A firm is trying to decide which of two machines to purchase as described in in the table below. Using the interest rate 9% or 0.09, use present worth analysis to determine which machine, if either, should be purchased. Show all your work. Machine: A - B First Cost: $800 - $600 Annual Net Benefit: $130 - $230 Salvage Value: $40 - $20 Usefil Life (years): 9 - 3
Mr. Jones is considering replacing one of the machines in the factory and seeks your advice. The following information is relevant; Purchase Price Salvage Value Estimated Useful Life Variable Operating Costs Fixed Operating costs Old Machine 252,000 50,000 6 Years 52,000 40,000 New Machine 380,000 50,000 5 Years 15,000 6,000 The Old Machine was bought one year ago and has been depreciated using the straight line basis You are Required to report to Mr. Jones on: a) Whether there will be a gain or loss on the sale of the old machine. b) Whether the old machine should be replaced.
Santa Rosa recently purchased a new boat to help ship product overseas. The following information is related to that purchase: • Purchase price $4,500,000 • Cost to bring boat to production facility $25,000 • Yearly insurance cost $25,000 Annual maintenance cost of $37,000 • Received 8% discount on sales price A. Determine the acquisition cost of the boat. B. Record the journal entry needed. If an amount box does not require an entry, leave it blank. 10
A city has purchased a new asphalt paving machine for $300,000.The city comptroller states that the machine will be depreciatedusing a stright line method. At the end of 8 years, the machinewill be sold with an expected salvage value of 60,000.a. Determine the function V = f(t) which expresses the bookvalue of the machine V as a function of its age t.b. What is the book value expected to be when the machine is 6years old?
Its required to select one of the two machines, if you know that the firms MARR-12% and if the costs are shown below: Project A Project B Initial cost, $ 7650 12900 Maintenance cost, S/year 1200 900 Salvage value, $ 2000 Economic life, year 4 Compare the two-alternative using: 1-Equavlent Annual worth comparison. 2- Present worth comparison
Ronson recently purchased a new boat to help ship product overseas. The following information is related to that purchase: purchase price $4,500,000 cost to bring boat to production facility $15,000 yearly insurance cost $12,000 pays annual maintenance cost of $22,000 received a 10% discount on sales price Determine the acquisition cost of the boat and record the journal entry needed.
Santa Rosa recentiy purchased a new boat to help ship product overseas. The following information is related to that purchase: Purchase price $4,100,000 Cost to bring boat to production facility $29,000 Yearly insurance cost $29,000 Annual maintenance cost of $40,000 Received 6% discount on sales price A. Determine the acquisition cost of the boat. $ 4,375,000 X Feedback Check My Work Remember that any costs incurred in the process of acquiring an asset and making it ready for its intended use can be capitalized as part of the value of the asset. Any other costs that maintain the asset during its use are standard expenses (not capitalized). B. Record the journal entry needed. If an amount box does not require an entry, leave it blank. Вoat 4,375,000 X Cash 4,375,000 X
On 1 May 2020, Ron Trading purchased a new machine. The following paymentsrelate to the machine.List price $21,500Purchase discount $2,000Transportation cost $300Repair of damage parts incurred in transporting the machine $1,000Fees paid to test the machine before use $500Fees paid to the installer to install the machine $800Machine operator’s salary for the first month of operation $3,000Maintenance costs for the first month of operation $300(i) Identify and compute the cost of the machine to be recognised. Explainyour reasoning.(ii) Journalise the transactions. Assume the above payments are paid in cash.
On January 2, 2000, the Ajax Plumbing Corporation purchases an automatic soldering machine for $18,000. The Corporation plans to transfer the machine to a subsidiary at the end of 2005 for $11,000. Determine the life of the machine so that the book value at the end 2005 will be $11,000, if the salvage value after L years should be $4,000 using:a. SLMb. DDBM
My Questions is: Can you display what the pay back period is for the New and Old backhoes from using the calculations from the chart you answered. The following information is available to use in deciding whether to purchase the new backhoes or old backhoes. Using the 8% Present Value of an Annuity of 1 Old Backhoes New Backhoes Purchase cost when new $90,000 $200,000 Salvage value now $42,000 Investment in major overhaul needed in next year $55,000 Salvage value in 8 years $15,000 $90,000 Remaining life 8 years 8 years Net cash flow generated each year $30,425 $43,900 Answer that Bartebly provided is down below. Hello the Profitability index was answered already so can you provide the pay back period for New and Old Backhoes. Thank you My Questions is: Can you display what the pay back period is for the New and Old backhoes from using the calculations from the chart you answered. Expert Answer…
Ayayai’s Lawn Service needs to purchase a new lawnmower costing $7,756 to replace an old lawnmower that cannot be required. The new lawnmower is expected to have a useful life of 4 years, with no salvage value at the end of that period. Appendix 9.1 – Period 4 at 10%Present value of $1 received in n periods= 0.6830 Appendix 9.2- Period 4 at 14% Present value of an annuity of $1 per period = 2.9137 If Ayayai’s required rate of return 10%, what level of annual cash savings must the lawnmower generate to be considered an acceptable investment under the net present value method? Annual Cash Savings should be $ If Ayayai’s required rate of return 14%, what level of annual cash savings must the lawnmower generate to be considered an acceptable investment under the net present value method? Annual cash savings should be?
Santa Rosa recently purchased a new boat to help ship product overseas. The following information is related to that purchase: Purchase price $840,000 Cost to bring boat to production facility $25,000 Yearly insurance cost $3,600 ·Annual maintenance cost of $12,000 Cost to make the boat handicap accessible $9,000 Received 8% discount on sales price Determine the acquisition cost of the boat, and record the journal entry needed.