Answered: Annual maintenance cost for a machine…

Annual maintenance cost for a machine is P1500 this year and are estimated to increase 10% each year. What is the present worth of the maintenance cost for 6 years if interest is 8%?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14EB: How much must be invested now to receive $50,000 for 8 years if the first $50,000 is received in one...

See similar textbooks

Related questions

Q: 1. A company will have to spend $300000 on new plant in two years from now. Currently investment…

A: Present Value = $300,000 Time Period = 2 Years Interest Rate = 10%

Q: Annual maintenance for a machine are P 1,500.00 this year and are estimated to increase 10% each…

A: Working note for a, b and c as follows:

Q: How much money should be invested at rate 2% compounded semi-annually to produce a future value of…

A: Present value of an investment is the initial amount that is invested in financial asset. It is…

Q: A house costs $141,000. It is to be paid off in exactly ten years, with monthly payments of…

A: An amount of annual percentage which is charged from borrowers of the loan and paid to the…

Q: The price of a machine now is P 20,000 and its value will increase by 4% every year. The machine…

A: Here, Price of Machine is P20,000 Increase in Value of Machine every year is 4% Scrap Value is P2000…

Q: The annual maintenance cost of a generator is P1000 after 1 year and it is estimated to increase 10%…

A: Discounting is a technique which is used to compute the present value (PV) of future amount by…

Q: Annual maintenance cost for a machine is ₱25,000 for 6 years. Interest rate is 6%. If the…

A: Capital Budgeting: Capital budgeting decisions are the most important decision in corporate…

Q: year-end bonus of $25,000 will generate how much money at the beginning of each month for the next…

A: Year End Bonus=$25000 interest rate =6.06 monthly interest =6.06/12=0.505 monthly interest =0.505%0…

Q: What is the equivalent present worth of the costs

A: Present value (PV) of growing annuity refers to an annuity which shows the current value of all the…

Q: The annual maintenance cost of a generator is P834 after 1 year and it is estimated to increase by…

A: Annual Maintenance Cost = 834 End of period cost structure Increase in annual maintenance costs =…

Q: Annual maintenance cost for the machine is P 1,500 this year and estimated to increase 8% each year…

A: Future value is the value of an asset at a specific date. It measures nominal future sum of money…

Q: Annual maintenance costs for a machine are ₱ 1,500 this year and are estimated to increase 10% each…

A: Maintenance costs: These are the costs incurred to maintain the productive capacity of an asset or…

Q: Given a 10% interest rate, what is the equivalent uniform annual worth of a system, given the…

A: The equal annual net cash flow is known as the equivalent uniform annual worth. It is calculated by…

Q: A year-end bonus of $23,000 will generate how much money at the beginning of each month for the next…

A: Given data; year end bonus = $23,000 interest rate = 6.33% compounded monthly number of payments =…

Q: Annual maintenance cost for a machine is P1500 this year and it is estimated there is an increase…

A: Given Information:Annual maintenance cost per year is P1500 Increment in annual cost each year is…

Q: The maintenance cost in year 1 is $23000, increasing by 7% each year. What is the present worth of…

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: The operating cost for a pulverized coal cyclone furnace is expected to be $80,000 per year. The…

A: The cost for a year of possessing and operating an asset for its whole lifespan is known as the…

Q: Calculate the equivalent annual cost for years 1 through infinity of $1,000,000 now and $1,000,000…

A: Formula to calculate the PV is: PV = FV*(1+i)^-n EAC = PV*i

Q: rmed in the fifth year so tha

A: Alternative A is the name of the option.It is also feasible to do the maintenance yourself at a cost…

Q: What will be the Value of 10000$ invested @10% p.a compounded monthly for 25 years?

A: Future value is the worth of a current sum of money after a specified time span, given a fixed…

Q: A 10-year investment will pay $2,500 at the end of this year, and the payments will grow at a rate…

A: Answer: Given data, Future value = $2,500 Required rate of return = 15% Paymets grow @ 5% per year

Q: An annual maintenance cost of a machine is 500 this year. It is expected to increase 50 pesos per…

A: The time value of money is the idea that the value of money received today will be more worthy than…

Q: A piece of machinery can be bought for P10,000 cash or for P2,000 down and 20,000 at the end of 15…

A: Present Value refers to the value of cash flows today which is to be received at some future time…

Q: Annual maintenance costs for a machine are ₱25,000 for six years. Interest rate is 6%. If…

A: Present value (PV), if the stated rates of return are provided, is the current value of a future…

Q: The annual maintenance cost of a generator is P1000 after 1 year and it is estimated to increase by…

A: The cash flow in an arithmetic gradient cash flow changes (increases or lowers) by the same amount…

Q: An electronic device is available that will reduce this year’s labor costs by $8,000. The equipment…

A: Capital budgeting indicates the evaluation of the profitability of possible investments and projects…

Q: The annual maintenance cost of a generator is P1000 after 1 year and it is estimated to increase by…

A: The above information forms a geometric gradient series where, A=P1000g=8%n=7 yearsi=15%

Q: Calculate the annual worth of a machine that has an initial cost of $35,000, a life of 10 years, and…

A: Interest Rate = 15% per year Initial Cost = 35000 Time Period (N) = 10 years Cash Flows: Year…

Q: Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be…

A: Equivalent annual worth is the technique which is used for investment proposal assessment. It can be…

Q: A year-end bonus of $26,000 will generate how much money at the beginning of each month for the next…

A: Bonus amount (PV) = $26000 Interest rate = 6.36% Monthly interest rate (r) = 6.36%/12 = 0.53% Number…

Q: it is desired to save $20,000 by depositing $800 every 3 months in an investment that pays 8%…

A: Annuity means a set of finite number of payments which are the same in size and made in equal…

Q: A new roof will cost $12000 . It will be invested in 19 years . If the interest rate is 7% per year…

A: Amount to be invested each year = A r = 7% Accumulated amount = $12000 n = 19 years

Q: If money can be invested at 7% compounded monthly, find the present value of 55,300 whic is due…

A: Present value is the sum of the current value of money of future cash flows. It is also known as a…

Q: You are offered payments of P1500.00 att he end of each quarter for 6 years. You feel that the cost…

A: The present value of future and periodic cash flows is the value of these cash flows at the present…

Q: The cost of utilities (e.g. water and electricity) of a company is expected to increase at a rate of…

A: Introduction Equivalent annual cost The equivalent annual cost is the overall amount of…

Q: An investment that will give you monthly payments for 14 years costs $146,897. If your required…

A: An annuity is a series of cash flows that involve equivalent periodic amounts at equal time…

Q: How much must be invested today at 10 %, compounded semiannually for 25 years, to produce…

A: At specific rate of return, present value (PV) would be the current price of a future amount of…

Q: rest rate earned on money

A: We need to compute the future price of machine after 8 years and then shall compute the amount to be…

Q: $14,000 is invested for 8 years at an annual simple interest rate of 16%. (a) How much interest will…

A: Note: It is considered that the given interest rate is simple interest rate as given in the…

Q: The annual maintenance cost of a generator is P1000 after 1 year and it is estimated to increase by…

A: Annual Maintenance Cost = 1000 End of period cost structure Increase in annual maintenance costs =…

Q: The operating and maintenance expenses for a mining machine are expected to be $11000 in the first…

A: The following Information has been provided: Operating and maintaining expenses of an amount of…

Q: What single investment made today, earning 10 % annual interest, will be worth 10,000 TL at the end…

A: Given:Annual interest =10%Amount in future =$10000Time period =3 years

Q: A year-end bonus of $23,000 will generate how much money at the beginning of each month for the next…

A: Present Value: The present value is the value of cash flow stream or the fixed lump sum amount at…

Q: A certain company has the following maintenance cost for all of its machine. On the first 5 years,…

A: The amount the company will pay today can be found using the present value concept. By discounting…

Q: The maintenance on a machine is expected to be P3,500, P7,000, P10,500, and P14,000 for the second,…

A: We will have to use the concept of time value of money which states that worth of money changes with…

Q: The price for a building was $ 125,000. How many months will it take to pay for the building if $…

A: given, price of building=$125000 advance=$25000 A=$1000 per month rate=9% m=12

Question

Annual maintenance cost for a machine is P1500 this year and are estimated to increase 10% each year. What is the present worth of the maintenance cost for 6 years if interest is 8%?

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 with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

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

Similar questions

Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?
Project X costs $10,000 and will generate annual net cash inflows of $4,800 for five years. What is the NPV using 8% as the discount rate?
Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate?
Gardner Denver Company is considering the purchase of a new piece of factory equipment that will cost $420,000 and will generate $95,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further Instructions on internal rate of return in Excel, see Appendix C.
Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
A restaurant is considering the purchase of new tables and chairs for their dining room with an initial investment cost of $515,000, and the restaurant expects an annual net cash flow of $103,000 per year. What is the payback period?
Jullo Company is considering the purchase of a new bubble packaging machine. If the machine will provide $20,000 annual savings for 10 years and can be sold for $50,000 at the end of the period, what is the present value of the machine investment at a 9% interest rate with savings realized at year end?
Annual maintenance cost for a machine is P1500 this year and it is estimated there is an increase 10% each year. What will be the maintenance cost in second year.
The annual maintenance cost of a generator is P1000 after 1 year and it is estimated to increase by 4% each year for the subsequent 7 years. Find the present worth of the maintenance cost if the rate of interest is 15% compounded annually.
An annual maintenance cost of a generator is P1000 after two years and it is estimated to increase by 10% each year for the subsequent 7 years. Calculate the total maintenance cost 2 years after the last payment.
The maintenance on a machine is expected to be ₱8984 for the second year and an additional ₱1,750 cost every year until year 6. What is the present equivalent value at the beginning of the first year if the interest is 3% per year?
The maintenance for a piece of equipment costs P16,875 at the end of year one and increases by 12.357% every year for 6 years. If the interest rate is 8.657% compounded annually, what is the equivalent annual cost of the maintenance?