Question
Asked Mar 18, 2020
1 views

An asset costing $10,000 has the salvage values and operating cost shown below. Using 8%, when should the asset be replaced with an identical part?

End of Year Salvage Operating Cost
1 6000 2300
2 4000 2500
3 3200 3300
4 2500 4800
5 2000 6800
6 1800 9500
7 1700 12,000
check_circle

Expert Answer

Step 1

Calculate the net cash outflow as follows:

Finance homework question answer, step 1, image 1

Formulas:

Finance homework question answer, step 1, image 2

 

...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.

Related Finance Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Companies, and governments can all borrow money using bonds. But only corporations have stockholders...

A: When companies or governments issue bonds, there is a fixed rate of return expected from the issued ...

question_answer

Q: You sell 100 shares of stock short for 40$ per share. You want to limit your loss on this transactio...

A: The question is based on the concept of trading in stock market, investors can use different methods...

question_answer

Q: you bought that 10,000 par treasury bill at $9,936.25 and sell it 90 days later for $9,975 waht was ...

A: Effective annual rate (EAR) refers to the actual return received from an investment. It considers th...

question_answer

Q: The coupon rate on a tax-exempt bond is 5.6%, and the rate on a taxable bond is 8%. Both bonds sell ...

A: Tax-exempt bond is 5.6%.  By using the formula of Equivalent taxable yield, The formula of Equivalen...

question_answer

Q: How is a bond’s value determined? What is the value of a 10-year, $1,000 par value bond with a 10% a...

A: Bond’s current value can be determined by computing the present value of the bond’s future interest ...

question_answer

Q: Determine Break-even probability: p= 0.95, present value of $1,260 for revenues, present value of $1...

A: The expected profit must be equal to zero at break-even probability of collection. The firm can suff...

question_answer

Q: Humberto’s Salsas is a regional manufacturer of salsa sand sauces. Humberto sells primarily through ...

A: given in question Particular Type A Type b Type c Margin $40,000 $55,000 $75,000...

question_answer

Q: Chapter 8 Consumer Purchasing Strategies and Legal Protection Financial Planning Q9

A: Answer: Cost of buying a motor vehicle is $13,880 Cost of leasing a vehicle is $16,860

question_answer

Q: You purchase a cottage for $175,000. You obtain a 30-year, fixed rate mortgage loan at 12.5% after p...

A: Cost of the cottage is $175000 Down payment = 30%*$175000 = $52500 Loan = Cost – down payment = $175...