A company that sells has proposed to a small public utility company that it purchase a small electronicscomputer for $1,000,000 to replace ten calculating machines and their operators. An annual servicemaintenance contract for the computer will be provided at a cost of $100, 000 per year. One operatorwill be required at a salary of $110, 000 per year and one programmer at a salary of $160, 000. Theestimated economical life of the computer is 10 years. The calculating machines costs $8,000 each whennew, 5 years ago, and presently can be sold for $2,000 each. They have an estimated life of 8 years andan expected ultimate trade in value of $1, 000 each. Each calculating machine operator receives $85,000 per year. Fringe Benefits for all labour cost 8% of annual salary. Annual maintenance cost on thecalculating machine has been $500 each. Taxes and insurance on all equipment is 2% of the first cost peryear.If capital costs the company about 25%, would you recommend the computer installation?

pany that sells has proposed to a small public utility company that it purchase a small e uter for $1,000,000 to replace ten calculating machines and their operators. An annual enance contract for the computer will be provided at a cost of $100, 000 per year. One required at a salary of $110, 000 per year and one programmer at a salary of $160, 00 ated economical life of the computer is 10 years. The calculating machines costs $8,000 years ago, and presently can be sold for $2,000 each. They have an estimated life of 8 mected ultimate trade in value of $1, 000 each. Each calculating machine operator recei er year. Fringe Benefits for allI labour cost 8% of annual salary. Annual maintenance cost ating machine has been $500 each. Taxes and insurance on all equipment is 2% of the f tal costs the company about 25%, would you recommend the computer installation?

pany that sells has proposed to a small public utility company that it purchase a small e uter for $1,000,000 to replace ten calculating machines and their operators. An annual enance contract for the computer will be provided at a cost of $100, 000 per year. One required at a salary of $110, 000 per year and one programmer at a salary of $160, 00 ated economical life of the computer is 10 years. The calculating machines costs $8,000 years ago, and presently can be sold for $2,000 each. They have an estimated life of 8 mected ultimate trade in value of $1, 000 each. Each calculating machine operator recei er year. Fringe Benefits for allI labour cost 8% of annual salary. Annual maintenance cost ating machine has been $500 each. Taxes and insurance on all equipment is 2% of the f tal costs the company about 25%, would you recommend the computer installation?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company that sells has proposed to a small public utility company that it purchase a small electronics computer for ₱1,000,000 to replace ten calculating machines and their operators. An annual service maintenance contract for the computer will be provided at a cost of ₱100, 000 per year. One operator will be required at a salary of ₱110, 000 per year and one programmer at a salary of ₱160, 000. The estimated economical life of the computer is 10 years. The calculating machines costs ₱8,000 each when new, 5 years ago, and presently can be sold for ₱2,000 each. They have an estimated life of 8 years and an expected ultimate trade in value of ₱1, 000 each. Each calculating machine operator receives ₱85, 000 per year. Fringe Benefits for all labour cost 8% of annual salary. Annual maintenance cost on the calculating machine has been ₱500 each. Taxes and insurance on all equipment is 2% of the first cost per year. If capital costs the company about 25%, would you recommend the computer…