Compute the capitalized cost of a new car worth P800,000.00 if it is estimated that it requires P20,000.00 per year to maintain and must be replaced at the same amount with a salvage value of P300,000.00 after 5 years if the interest rate is 12% per annum.

Compute the capitalized cost of a new car worth P800,000.00 if it is estimated that it requires P20,000.00 per year to maintain and must be replaced at the same amount with a salvage value of P300,000.00 after 5 years if the interest rate is 12% per annum.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Q: "Orion S.A" is considering a new investment which will entail an immediate capital expenditure of…

A: Calculation of Depreciation=Investement-Salvage ValueMachine LifeCalculation of…

Q: maintenance costs of this equipment are estimated to be about $25,000 per year. Salvage value is…

A: EUAC is uniform annual equivalent cost that is equivalent to all costs of equipment.

Q: Concord, Inc. is considering purchasing equipment costing $48000 with a 6-year useful life. The…

A: The Profitability index is calculated by dividing the present value of future expected cash flows by…

Q: Culver Company is considering investing in new equipment that will cost $1428000 with a 10 year…

A: Payback period The method used in capital budgeting to help investors understand the approximate…

Q: A TV is costs P90,000. Its estimated scrap value is P10,000 after 8 years. Solve for the constant…

A: Depreciation is decrease in the value of fixed asset due to wear and tear, and passage of time.

Q: 1. Consider the following alternatives: First cost 5000 10,000 Annual Maintenance 500 200…

A: Rate of return analysis is done to choose a project with a better return on the cost of the…

Q: The boiler in a steam power plant costs P 25,000,000 and has a salvage value of P 850,000 at the end…

A: Depreciation ExpensesDepreciation expense is the methodical distribution of a long-term asset's cost…

Q: What is the capitalized cost of a calendering machine that costs ₱1231,000 upon purchase, requires…

A: Initial cost (X) = P 1231000 Annual cost (A) = P 412000 Replacement cost (R) = P 89000 every 5 years…

Q: Calculate the equal, end-of-period, annual cost of a machine which costs $75000 initially and will…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: Blue Spruce, Inc. is considering purchasing equipment costing $84000 with a 6-year useful life. The…

A: The question is multiple choice question and related with Capital Budgeting. Required Choose the…

Q: An equipment cost P60,000 today and its salvage value is P20,000 after 6 years. Calculate its book…

A: Given in the question: Cost of equipment = P 60,000 Salvage value = P 20,000 No.of years = 6 years…

Q: A TV is costs P90,000. Its estimated scrap value is P10,000 after 9 years. Solve for the constant…

A: Sinking fund method is not only a depreciation method but it is also a refinancing method, where it…

Q: A piece of equipment has a first cost of $165,000, a maximum useful life of 7 years, and a market…

A: The estimated span of time that an asset will be beneficial to the average owner is referred to as…

Q: A machine has a first cost of P50,000 with interest rate of 10% annually. Expected salvage value…

A: Depreciation is the total loss in value of an asset over the life of the asset. The value of asset…

Q: With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine…

A: calculation of replacement cost are as folows

Q: Engr. Collado is using a 10% annual interest rate to decide if it should by cement mixer A with…

A: We need tp compute Net present value of both the options. Net present value is excess of present…

Q: nas a project with a $28 000 first cost that returns $5000 per year over its 1 value of $3000 at the…

A: in this problem we have to calculate present value of benefits and salvage value and calculate…

Q: A new machine requires an investment of $630,000 and will generate $100,000 in cash inflows for 7…

A: The Net Present value iscalculated with the help of following formula Net Present Value = Present…

Q: A machine has a first cost of P60,000 with interest rate of 12% annually. Expected salvage value…

A: Using sinking fund method:- Annual depreciation= [(FC-SV)*i]/[(1+i)n -1] Book value = FC -…

Q: A company is considering a project. The project requires new machinery at a cost of £140,000 which…

A: The accounting rate of return is a capital budgeting ratio that is used to find the profitability of…

Q: With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine…

A: The objective of the question is to find the market value of Machine X such that its Annual Worth…

Q: A remotely situated fuel cell has an installed cost of BD2,000 and will reduce the existing expen:…

A: Salvage value is the book value of an asset (like an equipment or a machinery) after all…

Q: at the end of the 5th year, there is a salv ows are estimated as follows: D00 TL, 2. year. 500 000…

A: Given information : Year Cash flows 0 1200000 1 350000 2 500000 3 700000 4 850000 5…

Q: Grady Corp. is considering the purchase of a new piece of equipment. The equipment costs $50,700,…

A: Solution a: Present value of increase in annual cash flows = $6,110 * PVA of 1 at 13% for 6 periods…

Q: From the given values below, which machine should be selected using (a) Present worth Method and (b)…

A: Present Worth: It is the present value of the annual cash flows and the cost of the project…

Q: A TV is costs P90,000. Its estimated scrap value is P10,000 after 8 years. Solve for the constant…

A: The following calculations are done for the computation of constant depreciation.

Q: A machine was purchased with an amount of P375,000.00 and a modification cost of P100,000.00 after…

A: Capitalization costs include: Installation costs Labor charges Transportation costs Interest…

Q: SIMPLE INTEREST AND COMPOUND The future value of a cooling tower is $90,000 and the useful…

A: When money is deposited than money earns interest at a specific rate and hence the value increases…

Q: What is the payback period at an interest rate of 10% per year for an asset with initial cost of $…

A: The capital budgeting process is a vital process for a corporation or an individual and helps in…

Q: A buffing machine is costs P10,000. Its estimated scrap value is P1,000 after 10 years. Solve for…

Q: Click to see additional instrùctions The internal rate of return, rounded to two decimal places as a…

A: Internal Rate of Return The internal rate of return refers to the exact return that an investment…

Q: A machine has a first cost of P50,000 with interest rate of 10% annually. Expected salvage value…

A: The business organizations are required to charge the depreciation expense so as to shown the assets…

Q: Y Company is considering purchasing a machine for $15,000. The machine will generate a net after-tax…

A: The payback period is one of the capital budgeting technique which use to evaluate the project based…

Q: A machine which costs P100, 000 when new has a lifetime of 15 years and a salvage value equal to 20%…

A: In the business sector, capital recovery has numerous different meanings. It is largely concerned…

Q: The buying price of a shovel was 100,000$, the annual cost of maintenance was 0,000$ for 20 years,…

A: Solution Given Buying price 100000 Annual cost of maintenance 30000 Number of years…

Q: Consider the following operating and maintenance costs of a new machine whose first cost is $ 86,000…

A: Please see the next step for the solution

Q: Two alternatives are being considered for installation. Which should be selected based on an…

A: Under Capital budgeting decision, when the life of alternative projects is not same, equivalent…

Q: If an asset costs $65,000 and is expected to have a $5,000 salvage value at the end of its ten-year…

A: Cash payback period = Initial investment /annual cash inflow

Question

CAPITALIZED COST
1. Compute the capitalized cost of a new car worth P800,000.00 if it is estimated that it
requires P20,000.00 per year to maintain and must be replaced at the same amount with
a salvage value of P300,000.00 after 5 years if the interest rate is 12% per annum.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Palmer Corporation is considering the purchase of a new plece of equipment. The cost savings from the equipment would result in an annual increase in net income of $152,000. The equipment will have an initial cost of $494,000 and a 8 year useful life. If the salvage value of the equipment is estimated to be $78,000, what is the payback period? Multiple Choice 2.42 years 3.25 years 8.00 years 4.00 years
6. A contractor can buy dump trucks for P800,000.00 each(surplus) or rent them for P1,189 per truck per day. The truck has a salvage value of P100,000 at the end of its useful life of 5 years. Annual cost of maintenance is P20,000.00. If money is worth 14% per annum, determine the number of days per year a truck must be used to warrant the purchase of the truck. A. 200. B. 199 C. 145 D. 102
What is the value of the FW for an alternative which is at an interest rate of 8% per year if first cost is -23000, annual operating cost is -4000 per year, Salvage value 3000 and life is 3 years?
if an asset costs $s0600 and is expected to have a $4900 salvage value at the end of its 9-year life, and generates annual net cash inflows of $9200 each year, the cash payback period is O6.0 years. O5.5 years O5.0 years. O9.0 years
Please solve and explain! indicate your final answer!
With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equal to that of machine Y at an interest rate of 11% per year. Determine the replacement value. Market Value, $ Annual Cost, $ per Year Salvage Value Life, Years The replacement value is $ Machine X ? -62,500 12,500 3 Machine Y 85,000 -40,000 for year 1,increasing by 2000 per year thereafter. 21,000 5
A piece of equipment has a first cost of $75000, a maximum useful life of 4 years, and a market (salvage) value described by the relation Sk = 60000 – 10500k, where k is the number of years since it was purchased. The AOC series is estimated using AOC = 30000 + 4500k. The interest rate is 9% per year. When should the company replace this asset?
I need the answer as soon as possible
Project XYZ has a first cost of $75,000, operating and maintenance costs of $10,000 during each year of its 10 years life, and a $15,000 salvage value. What is its equivalent uniform annual cost (EUAC) if the interest rate is 10%/year? Most nearly number for answer. O No correct answer 21546 O 21262 21622 26223 22126
Please answer if you conform and give correct answer.
please answer very quickly
A piece of equipment has a first cost of $75000, a maximum useful life of 4 years, and a market (salvage) value described by the relation Sk = 60000 – 10500k, where k is the number of years since it was purchased. The AOC series is estimated using AOC= 30000 + 4500k. The interest rate is 9% per year. When should the company replace this asset?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS