A machine shop purchased 12 years ago an Arc Welding Machine for Php 73,000.00. A straight-line depreciation reserve had been provided on an 18 years life of the machine. The owner of the machine shop desires to replace the old Ard welding Machine with a modern unit of many advantages costing Php. 120,000.00 It can sell the old unit for Php. 30,000. How much new capital will be required for the

A machine shop purchased 12 years ago an Arc Welding Machine for Php 73,000.00. A straight-line depreciation reserve had been provided on an 18 years life of the machine. The owner of the machine shop desires to replace the old Ard welding Machine with a modern unit of many advantages costing Php. 120,000.00 It can sell the old unit for Php. 30,000. How much new capital will be required for the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Twelve years ago, an industrial facility bought a boring machine for P65,000. The estimated life of this machine is 25 years and a depreciation reserve had been placed based on this. The price of the latest model is P125,000 and the facility owner wants to replace the machine with this latest model. The old unit can be sold for P18,000. How much new capital will be required for the purchase?
What is the capitalized cost of an asset that has a purchasing cost of P500,000.00 and needs a yearly upgrading cost of P8,000.00 for the first 5 years and P10,000.00 after. Also it needs a modification cost of P11,434,000.00 every 10 years. The life of the asset is 20 years with no salvage value. What is the present worth in pesos needed to operate this asset and if money is worth 0.1 per annum?
A firm purchased 12-years ago a computerized machine worth P 613,011. As the life of the machine was 20 years, funds are reserved based on a Sinking-Fund method of depreciation. Now the firm wishes to replace it with a current model possessing several advantages. The firm can sell it today for P 89,286. The new machine will cost P 1,137,024. How much new capital will be required to make the purchase? Assume interest to be 23% cpd-a.
An eco-industrial park has a manufacturing plant which purchased a lathe machine for P57,500 seven years ago. A reserve for machine replacement has been provided using straight-line depreciation accounting its 20 years life span. The plant manager has decided to replace the old machine with a newer model costing P95,000. The manager can sell the old machine for P17,500. What is the amount of the additional capital needed to purchase the new machine?
. A new engine will cost P12,000 with an estimated life of 15 years and a salvage value of P800 and guaranteed to have an operating cost of P3500 per year. The new engine is considered as a replacement of the old one. The old engine had a total annual cost of P5,200 to operate. Determine the rate of return of the new investment using 6% sinking fund to recover depreciation, if the old engine could be sold now for P2000.
A machine was purchased with an amount of P375,000.00 and a modification cost of P100,000.00 after 12 years. It needs regular maintenance that cost P15,850.00 per year. A software renewal cost of P5,501.00 every two years. What is the total capitalized cost that needs to prepare for the acquisition of this asset in pesos given that the interest rate is 0.13 annually?
A firm purchased 12-years ago a computerized machine worth P 936042. As the life of the machine was 20 years, funds are reserved based on the Sum of the Years’ Digit (SYD) method of depreciation. Now the firm wishes to replace it with a current model possessing several advantages. The firm can sell it today for P 84019. The new machine will cost P 1471164. How much new capital will be required to make the purchase?
Neptune company plans to purchase a new machine for the expansion project. The machine’s price is RM200,000 and it would cost another RM20,000 for installation and RM 15,000 for net working capital. The company is planning to finance the machine’s cost through bank loan with an interest rate of 8% per year. The machine has an expected life of 10 years and will be depreciated using simplified straight line depreciation method. However, the project is expected to be ended in year seven. The company expect that this new machine would increase the company’s annual income of RM40,000 per year. The maintenance cost for the machine will be RM10,000 per year. Additionally, the use of this new machine is expected to reduce the defect cost by RM2,000 per year. At the end of year 7, this machine is expected to be sold at RM30,000. Assuming the tax rate is 28% and the required rate of return is 10%, find whether ABC should proceed with this planning. Justify your answer.
A firm purchased 12-years ago a computerized machine worth P 758,123. As the life of the machine was 20 years, funds are reserved based on a Double Declining Balance method of depreciation. Now the firm wishes to replace it with a current model possessing several advantages. The firm can sell it today for P 58,258. The new machine will cost P1,095,347. How much new capital will be required to make the purchase?
A machine was purchased with an amount of P375,000.00 and a modification cost of P100,000.00 after 12 years. It needs regular maintenance that cost P15,850.00 per year. A software renewal cost of P7,287.00 every two years. What is the total capitalized cost that needs to prepare for the acquisition of this asset in pesos given that the interest rate is 0.09 annually? complete solution of capitalized cost please not in excel
Teja International is determining the cash flows for a project involving replacement of an old machine by a new machine. The old machine bought a book value of 7800,000 and it can be sold to realise a post-tax salvage value of 7900,000. It has a remaining life of five years after which its net salvage value is expected to be 200,000. It is being depreciated annually at a rate of 25 percent under the WDV method. few years ago has a The new machine costs 3,000,000. It is expected to fetch a net salvage value of 71,500,000 after five years. The depreciation rate applicable to it is 25 percent under the WDV method. The new machine is expected to bring a saving of 7650,000 annually in manufacturing costs (other than depreciation). The incremental working capital associated with this machine is 500,000. The tax rate applicable to the firm is 30 percent. (a) Estimate the cash flow associated with the replacement project. (b) What is the NPV of the replacement project if the cost of capital is…
An engineering firm purchased 12 years ago a heavy planner for P 50,000. As the life of the planner was 20 years, a straight line depreciation reserve has been provided on that basis. Now the firm wishes to replace the old planner with a newly-designed planner possessing several advantages. It can sell the old planner for P 10,000. The new machine will cost P 70,000. How much new capital will be required to make the purchase? 30,000.00 40,000.00 2,500.00 4,166.67 50,000.00 12,500.00