TABLE 6.8 Estimates for Alternative Equipment, Example 6.7 Alternative 1 2 3 4 First cost, $ - 80,000 -50,000 - 145,000 -20,000 - 28,000 - 16,000 Annual cost, $/year Annual revenue, $/year -26,000 -21,000 61,000 43,000 51,000 29,000 Life, years 4 4 4

TABLE 6.8 Estimates for Alternative Equipment, Example 6.7 Alternative 1 2 3 4 First cost, $ - 80,000 -50,000 - 145,000 -20,000 - 28,000 - 16,000 Annual cost, $/year Annual revenue, $/year -26,000 -21,000 61,000 43,000 51,000 29,000 Life, years 4 4 4

Pkg Acc Infor Systems MS VISIO CD

10th Edition

ISBN:9781133935940

Author:Ulric J. Gelinas

Publisher:Ulric J. Gelinas

Chapter17: Acquiring And Implementing Accounting Information Systems

Section: Chapter Questions

Problem 1SP

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Question 1: For the given data which alternative is better using present worth analysis? Use i- 12% A $10,000 $4500 Initial Cost $12,000 $15,000 $4950 $4800 $400 $4500 Annual benefit Annual O&M cost $450 $375 Salvage value Useful life $2500 $4000 2 4 $ 3P86.24 -4.617.29 3.992.35 $ 357871 $ 2,132 55 What is PW of Alternative A? What is PW of Alternative B? -8.092.50 What is PW of Alternative C?
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Net present value-unequal lives Dakota Mining Company has two competing proposals: a diamond core drill or a hydraulic excavator. Both pieces of equipment have an initial investment of $863,468. The net cash flows estimated for the two proposals are as follows: Year 1 2 3 4 5 6 7 8 Year 1 2 The estimated residual value of the diamond core drill at the end of Year 4 is $330,000. Present Value of $1 at Compound Interest 6% 10% 3 Net Cash Flow Diamond Core Drill 4 $263,000 234,000 234,000 187,000 142,000 118,000 103,000 103,000 0.943 0.890 0.840 0.792 0.909 0.826 0.751 0.683 Net Cash Flow Hydraulic Excavator 12% $329,000 305,000 281,000 289,000 0.893 15% 0.870 0.797 0.756 0.712 0.658 0.636 0.572 20% 0.833 0.694 0.579 0.482 4
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Table 1: The Planned Value of Work Done Schedule March 120,000 120,000 70,000 100,000 Jan Feb Project A Project B Project C Project D 60,000 100,000 80,000 120,000 100,000 80,000 80,000 120,000 Аpril 120,000 140,000 90,000 120,000 May 200,000 140,000 100,000 150,000 Based on the data obtained from each project, you have found out the value of work done on the 31st of March, which is shown in Table 2 below. Table 2: The Actual Value of Work Done and Direct Cost Incurred as of the 31st of March Project Direct Cost Incurred Actual Value of Work Done 300,000 250,000 250,000 280,000 A 220,000 180,000 200,000 240,000 Each project is supposed to contribute 10% profit and 8% overhead to the compoany. You are requested to present to the company the turnorer as of the 31st of march. Prepare your answer by answering the following questions. a) Calculate the planned ralue of work done, the total planned orerhead and the total profit contribution from all the projects as of the 31st of march. b)…
10 11 For questions 10-12, refer to the following problem: A manufacturing company is planning to make a newly developed product. Annual fixed cost for manufacturing of the product is $60,000. The selling price is S unit, and the variable cost is $6/unit. 10. To break even; the annual production level for the company needs to be at, a. 10,000 units b. 20,000 units c. 15,000 units d. 6,000 units 11. To make profit of $16,000; the annual production level for the company needs to be at, a. 19,000 units b. 19,500 units c. 20,000 units d. 31,000 units 12. If the company sets annual production at 12,000 units, what must the selling price be to beak even. Assume annual fixed cost is still $60,000 and unit varable cost is $- unit. a. $15/unit b. $10/unit c. $12/unit d. Sunit For questions 13 - 16, refer to the following problem: A company is considering two options for production of a part needed in manufacturing process. Cost information for these two options is as follows:…