A pump has failed in a facility that will be completely replaced in 3 years. A brass pump costing $6000 installed will last 3 years. However, a used stainless steel pump that should last 3 more years has been sitting in the maintenance shop for a year. The pump cost $13,000 new. The accountants say the pump is worth $7000 now. The maintenance supervisor says that it will cost an extra $500 to reconfigure the pump for the new use and that he could sell it used (as is) for $4000. (a) What is the book cost of the stainless steel pump? (b) What is the opportunity cost of the stainless steel pump? (c) How much cheaper or more expensive would it be to use the stainless steel pump rather than a new brass pump?

The Ocean City water park is considering the purchase of a new log flume ride. The cost to purchase the equipment is $8,000,000, and it will cost an additional $475,000 to have it installed. The equipment has an expected life of 6 years, and it will be depreciated using a MACRS 7-year class life. Management expects to run about 150 rides per day, with each ride averaging 35 riders. The season will last for 120 days per year. In the first year, the ticket price per rider is expected to be $5.25, and it will be increased by 4% per year. The variable cost per rider will be $1.65, and total fixed costs will be $525,000 per year. After six years, the ride will be dismantled at a cost of $245,000 and the parts will be sold for $600,000. The cost of capital is 8.5%, and its marginal tax rate is 25%.   Using Goal Seek, calculate the minimum ticket price that must be charged in the first year in order to make the project acceptable.

University Car Wash built a deluxe car wash across the street from campus. The new machines cost $255,000 including installation. The company estimates that the equipment will have a residual value of $22,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows:  Year Hours Used 1 3,100 2 1,600 3 1,700 4 2,300 5 2,100 6 1,700     Required: 1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculations.)

Fish-or-Cut-Bait excursion boats has just purchased a new 22 passenger skimmer for use over the next 10 years. The cost of the boat was $80,000. The income associated with the boat is expected to be $15,000 each year and the costs are estimated to be $2,000 the first year and increase by $500 per year each year thereafter. The salvage value of the boat is estimated to be $5,000. If the MARR is 5%, what is the payback for the boat?

Sheridan Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Sheridan Roofing spent $63,500 refurbishing the lift. It has just determined that another $53,500 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $180,500. The company estimates that both lifts would have useful lives of 6 years. The new lift is more efficient and thus would reduce operating expenses from $97,000 to $63,500 each year. Sheridan Roofing could also rent out the new lift for about $8,500 per year. The old lift is not suitable for rental. The old lift could currently be sold for $21,500 if the new lift is purchased. The new lift and old lift are estimated to have salvage values of zero if used for another 6 years. Prepare an incremental analysis showing whether the company should repair or replace the equipment. (Enter negative amounts using either a…

A water pump to be used by the city’s maintenance department costs $10 000 new. A running-in period, costing $1000 immediately, is required for a new pump. Operating and maintenance costs average $500 the first year, increasing by $300 per year thereafter. The salvage value of the pump at any time can be estimated by the declining balance rate of 20 percent. Interest is at 10 percent. Using a spreadsheet, calculate the EAC for replacing the pump after one year, two years, etc. How often should the pump be replaced?

Required: 1. Prepare a comparative income statement covering the next five years, assuming: a. The new machine is not purchased. b. The new machine is purchased. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Total expenses w Transcribed Text of purchasing the new machine Keep Old Machine S Minimum saving in costs 5 Years Summary Buy New Machine Ĉ Difference 2. Compute the net advantage of purchasing the new machine using only relevant costs in your analysis. (Do not round intermediate calculations.) Check my work 3. What is the minimum saving in annual operating costs that must be achieved in order for the president to consider buying the new machine?

University Car Wash built a deluxe car wash across the street from campus. The new machines cost $264,000 including installation. The company estimates that the equipment will have a residual value of $25,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows:  Year Hours Used 1 2,900 2 1,300 3 1,400 4 2,600 5 2,400 6 1,900     Required: 1. Prepare a depreciation schedule for six years using the straight-line method

Rakesh

Carla Vista Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Carla Vista Roofing spent $77,400 refurbishing the lift. It has just determined that another $45,500 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $194,000. The company estimates that both lifts would have useful lives of 5 years. The new lift is more efficient and thus would reduce operating expenses from $110,000 to $84,200 each year. Carla Vista Roofing could also rent out the new lift for about $11,500 per year. The old lift is not suitable for rental. The old lift.could currently be sold for $28,500 if the new lift is purchased. The new lift and old lift are estimated to have salvage values of zero if used for another 5 years. Prepare an incremental analysis showing whether the company should repair or replace the equipment. (Enter negative amounts using…