7. Canary Ltd. owns a yacht that is in need of repair and which was purchased for £6,800. The company is working to full capacity but is considering refurbishing the yacht for resale. Workers who are paid £20 per hour will carry out the refurbishment and it is estimated that 200 hours work is required. The normal labour charge for customers is £20 per hour. The company believes that the yacht could be sold for £6,200 in its current condition. Materials costing £1,000 would be required to carry out the refurbishment. Calculate the minimum resale price that the business would have to charge to justify the refurbishment of the yacht: A. £15,200 B. £11,200 C. £10,200 D. £6,200
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- Delima Bhd is considering replacing old machine with a new one to meet the increasing demand for its product in the future. The old machine was bought five years ago for RM120,000. It can be used for another 5 years with zero salvage value. The machine can be sold now for RM50,000. The maintenance and defect costs of this new machine is are RM8,000 and RM6,000, respectively, per year. This machine is handled by three workers. Each worker is paid a salary and other benefits RM15,000 per year. This benefits will not continue paid if new machine is bought. In addition, only two workers will be required if the new machine is bought and the company intends to terminate one of them. A compensation of RM60,000 will be paid to him immediately on termination. The new machine costs RM200,000. Transportation cost of RM8,000 and import duties of RM16,000 will be incurred. In order to use this machine efficiently, the company has to send the two workers for training at a cost of RM20,0000. The…Delima Bhd is considering replacing old machine with a new one to meet the increasing demand for its product in the future. The old machine was bought five years ago for RM120,000. It can be used for another 5 years with zero salvage value. The machine can be sold now for RM50,000. The maintenance and defect costs of this new machine is are RM8,000 and RM6,000, respectively, per year. This machine is handled by three workers. Each worker is paid a salary and other benefits RM15,000 per year. This benefits will not continue paid if new machine is bought. In addition, only two workers will be required if the new machine is bought and the company intends to terminate one of them. A compensation of RM60,000 will be paid to him immediately on termination. The new machine costs RM200,000. Transportation cost of RM8,000 and import duties of RM16,000 will be incurred. In order to use this machine efficiently, the company has to send the two workers for training at a cost of RM20,0000. The…Pascal Ltd intends to tender for a contract to make warning triangles to be carried in cars in the event of a breakdown. The contract will last for one year and will require the use of a machine that is already held. The machine cost £120,000 and has a carrying value of £70,000. The annual depreciation charge is £25,000 per year. It is estimated that the current market value is £50,000 and that it could be sold in one year's time for £20,000. What is the relevant cost of using the machine for the purposes of the tender?
- Which is a manufacturer of material handling equipment and machinery, is taking two alternatives into their consideration with regards to an equipment which it needs. Equipment A can be purchased with the cost of P850,000 and have a salvage value of P150,000 at the end of 10 years. It has a daily operating cost of P550. For the other option, the company can just rent the equipment for P1550 per day. At 18% interest, how many days should the equipment be is use if the Equipment A would be chosen to break even?Pan Corporation incurs costs of $1.8 million building a custom piece of machinery for one of its customers. The machine is 90% complete when Pan receives notice that the customer has declared bankruptcy. As a result, the customer is not able to accept delivery or pay anything for the machinery it ordered. Due to the custom design of the machine, there are no other potential buyers. Pan can sell the machine as scrap for $80,000 or it can redesign and complete the machine for $900,000, after which it could be sold for $1 million. Given the above information and assuming Pan's cost and revenue estimates pertaining to scrapping or rebuilding the machine are accurate, answer the following questions: 1. Costs irrelevant to this decision total $. 2. If Pan sells the machine as scrap, its incremental income will increase by $. 3. If Pan rebuilds and then sells the machine, its incremental income will increase by $.Linda’s Chocolate Factory decided to expand its business and bought a new machine on 1 January 2021 for $26,000. Other costs incurred were transport cost (from Sydney to Melbourne) $900 and insurance cost of $400 during the transportation. The initial Machine Operator training cost is $1,200 whereas the ongoing Operator training refresher, held every 6 months is $600 The useful life of the machine was estimated to be four years (or 5,000 units of production) while the residual value was $3,000. The machine was used to produce 1,300 units in the first year 1,700 units in the second year, 1,600 units in the third and 400 units in the fourth year. The depreciation rate under the reducing balance method equals to 2x straight line rate. Requirement 1. Which depreciation method is the preferred method for Linda’s Chocolate Factory for taxation purposes? Does the total depreciation expense recorded over the entire useful life of the machine (i.e. over the four years) differ under…
- FLY corporation manufactures stamp pad that sells for Php 65.00 each. It costs FLY corporation Php 35,000.00 per year to operate its plant. The sum includes rent, depreciation charges on equipment, and salary payments. If the cost to produce one stamp pad is Php 50.00, how many stamp pad must be sold each year for FLY to avoid taking a lossOvida company clinches a contract to supply cleaning services to a nursing home for the next 5 years. Under the contract, the company will be paid $1 million a year. To take up this contract, it would have to invest in new cleaning equipment costing $600,000 which will be depreciated straight-line to zero over 5 years. there is no salvage value at the end of 5 years. labour costs will be $300,000 per year and overheads $250,000 per year. the company will need to invest in net working capital of $350,000. it plans to issue $1 million worth of bonds for the next 5 years at a coupon rate of 6% and will price bonds at par. the company has an existing bank loan of $9 million. the cost of debt from a bank loan is the same as the bonds. the common stock of the company is selling for $10 per share and it has 2 million shares outstanding. expected dividend next year is $1 per share and dividends are expected to grow at 2% per annum. the tax rate is 20%. (a) compute the cost of equity b)…In a sugar refinery company, a group of professionals consists of 3 mechanical engineers and 1 accountant are planning to buy a new car for company. Two car brands to be finalized are Bime and Tocam. For Bime, the price is RM 260K now, with regular service RM 800 yearly. After 7 years the salvage value will turn into half of its price. For Tocam, the price is RM 170K now. It has to be regularly serviced with cost of RM1800 yearly. The salvage value 7 years from now is RM 70K. Which brand is more economically viable on the basis of a present worth analysis over a 7 year period at an interest rate of 12% per year?. Please do fast ASAP fast
- ABC Ltd. expects the cost of a machine to produce a specific part to be Rs. 40,00,000. After 5-year useful life, the machine is expected to have a salvage value of Rs.8,00,000. The annual maintenance costs are believed to be Rs. 14,00,000. How many parts must the company sell per year to break even at 12% annual interest rate, if the variable cost of producing the part is Rs. 150 per unit and if the part can be sold for Rs. 400 per unit? What will be the breakeven sales, if the selling price of the part is reduced to Rs. 300 per unit to counter act with the competitor?Covidam Company clinches a contract to supply cleaning services to a nursing home for the next 5 years. Under the contract, the Company will be paid $1 million a year. To take up this contract, it would have to invest in new cleaning equipment costing $600,000 which will be depreciated straight line to zero over 5 years. There is no salvage value at the end of 5 years. Labour cost will be $300,000 per year and overheads $250,00 per year. The Company will need to invest in net working capital of $350,000.It plans to issue $1 million worth of bonds for 5 years at a coupon rate of 6% and will price the bonds at par. The Company has an existing bank loan of $9 million. The cost of debt from the bank loan is the same as the bonds. The common stock of the Company is selling for $10 per share and it has 2 million shares outstanding. Expected dividend next year is $1 per share and dividends are expected to grow at 2% per annum into the foreseeable future.The tax rate is 20%. a) Calculate the…Covidam Company clinches a contract to supply cleaning services to a nursing home for the next 5 years. Under the contract, the Company will be paid $1 million a year. To take up this contract, it would have to invest in new cleaning equipment costing $600,000 which will be depreciated straight line to zero over 5 years. There is no salvage value at the end of 5 years. Labour cost will be $300,000 per year and overheads $250,000 per year. The Company will need to invest in net working capital of $350,000. It plans to issue $1 million worth of bonds for 5 years at a coupon rate of 6% and will price the bonds at par. The Company has an existing bank loan of $9 million. The cost of debt from the bank loan is the same as the bonds. The common stock of the Company is selling for $10 per share and it has 2 million shares outstanding. Expected dividend next year is $1 per share and dividends are expected to grow at 2% per annum into the foreseeable future. The tax rate is 20%. 1. Calculate…