Brooke is evaluating two alternatives for improving the exterior appearance of her Victorian-style house that she is remodeling inside. She plans to keep this as her home for 20 more years. The house can be completely painted at a cost of $10,500. The paint is expected to remain attractive for 5 years, at which time repainting will be necessary. Every time the building is repainted (i.e., in years 5, 10, and 15), the cost will increase by 20% over the previous time. As an alternative, the exterior can be covered with a vintage-appearing vinyl-coated siding now and again 10 years from now at a cost 27% greater than the present cost of the siding. At a MARR of 10% per year, what is the maximum amount that Brooke should spend now on the siding alternative so that the two alternatives will just break even? Solve using factors. The maximum amount that Brooke should spend now on the siding alternative is $

Brooke is evaluating two alternatives for improving the exterior appearance of her Victorian-style house that she is remodeling inside. She plans to keep this as her home for 20 more years. The house can be completely painted at a cost of $10,500. The paint is expected to remain attractive for 5 years, at which time repainting will be necessary. Every time the building is repainted (i.e., in years 5, 10, and 15), the cost will increase by 20% over the previous time. As an alternative, the exterior can be covered with a vintage-appearing vinyl-coated siding now and again 10 years from now at a cost 27% greater than the present cost of the siding. At a MARR of 10% per year, what is the maximum amount that Brooke should spend now on the siding alternative so that the two alternatives will just break even? Solve using factors. The maximum amount that Brooke should spend now on the siding alternative is $

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 50P

See similar textbooks

Similar questions

Brooke is evaluating two alternatives for improving the exterior appearance of her Victorian-style house that she is remodeling inside. She plans to keep this as her home for 20 more years. The house can be completely painted at a cost of $10,500. The paint is expected to remain attractive for 5 years, at which time repainting will be necessary. Every time the building is repainted (i.e., in years 5, 10, and 15), the cost will increase by 20% over the previous time. As an alternative, the exterior can be covered with a vintage-appearing vinyl-coated siding now and again 10 years from now at a cost 27% greater than the present cost of the siding. At a MARR of 10% per year, what is the maximum amount that Brooke should spend now on the siding alternative so that the two alternatives will just break even? Solve using factors. The maximum amount that Brooke should spend now on the siding alternative is $ .
Brooke is evaluating two alternatives for improving the exterior appearance of her Victorian-style house that she is remodeling inside. She plans to keep this as her home for 20 more years. The house can be completely painted at a cost of $16,000. The paint is expected to remain attractive for 5 years, at which time repainting will be necessary. Every time the building is repainted (i.e., in years 5, 10, and 15), the cost will increase by 20% over the previous time. As an alternative, the exterior can be covered with a vintage-appearing vinyl-coated siding now and again 10 years from now at a cost 25% greater than the present cost of the siding. At a MARR of 10% per year, what is the maximum amount that Brooke should spend now on the siding alternative so that the two alternatives will just break even? Solve using factors. The maximum amount that Brooke should spend now on the siding alternative is $ . Note:- Do not provide handwritten solution. Maintain accuracy and quality in…
Rebecca is moving away from New York City for her new job, so she must buy a car rather than rely on public transit. The new car she is considering will cost $ 18,000 to buy, $ 1,500 per year to insure, and $ 500 per year for maintenance after the 3-year warranty expires. She would keep the car for 7 years when it will have a salvage value of $ 7,000. She has found a 2-year-old car that is the same model for $ 13,000. The 3-year warranty is transferrable, so the annual maintenance cost of $500 starts in year 2. Because the car is less valuable, insurance is $300 per year less than for the new car. After 5 years, the vehicle will be 7 years old and will have the same salvage value of $ 7,000.Rebecca is ignoring costs for fuel, oil, tires and registration, because the two vehicles will have the same costs. If her interest rate is 9%, how much cheaper is the used car (difference of EAC of two vehicles)
Chris is considering submitting a bit for the requested project, which involves building four houses per year for the next 3 years for a gated community. To complete such project, Chris would need to buy tools in the amount of $66,000, which would be completely depreciated over the project’s lifespan assuming straight-line depreciation, and such tools can be sold for $40,000 at the end of the project. Net working capital would be $16,000 over the life span of the project. The project’s variable cost would be $88,000 per house, and fixed cost would be $18,000 each year. The tax rate is 34% and Chris’ require rate of return is 14%. How much at minimum Chris should bid for each house? (Rounded to the nearest $500). A. $115,000 B. $98,500 C. $97,500 D. $96,500 E. $95,50
Josaline, the owner of a construction company, is planning to purchase specialized equipment to complete a contract awarded to her company. The first cost of the equipment is $250,000 with a life of 3 years at which time she will no longer need the equipment. The operating cost is expected to be $75,000 per year. Alternatively, a subcontractor can perform the work for $175,000 per year. Because the equipment is specialized, Josaline is notsure about the salvage value. She estimates a likely salvage of $90,000, but it might have to be scrapped for as little as $10,000 in three years. TheMARR is 15% per year.a. Is her decision to buy the equipment sensitive to the salvage value?b. Determine the salvage value at which the two alternatives break even.
A new homeowner, Ms. Dee Young, needs to decide whether to install R-11 or R-19 insulation in the attic of her new home. The insulated area is 1,650 square feet. The upgrade from R-11 to R-19 insulation costs $0.10 per square foot. The upgraded insulation is expected to save Ms. Dee Young approximately 350 kilowatt hours of energy usage per year. The planning horizon is 19 years and electricity costs $0.07/kWh. MARR is 12% per year. The future worth of R-19 insulation is $
a) Catherine buys and sells real estate. Two weeks ago, she paid $300,000 for a house on Pine Street, intending to spend $50,000 on repairs and then sell the house for $400,000. Last week, the city government announced a plan to build a new landfill on Pine Street just down the street from the house Catherine purchased. As a result of the city’s announced plan, Catherine is weighing two alternatives: She can go ahead with the $50,000 in repairs and then sell the house for $290,000, or she can forgo the repairs and sell the house as it is for $250,000. What should Catherine do? (b) Consider your decision whether to go skiing for the weekend. Suppose transportation, lift tickets and accommodation for the weekend costs $300. Suppose also that restaurant food for the weekend will cost $75. Finally, suppose you have a weekend job that you will have to miss to go skiing, which pays you $120. Calculate the opportunity cost of going skiing? Do you need any other information about computing the…
Mr. Charles owns a private garbage dump. He has been asked that to avoid leaks that contaminate the groundwater, he must install a plastic protector. The landfill area is 7 km2 and the cost of handling the vapors is $ 1,000 per km2 and is paid for all land use. The installation cost of the protector is known to be $ 2,000,000. To recoup the investment in 5 years, Mr. Charles charged $ 50 for the delivery truck loads, $ 100 for the dump truck loads, and $ 200 for the compactor truck loads. It is also known that the monthly distribution has been estimated at 1,000 delivery truck loads, 200 dump truck loads and 500 compactor truck loads. a) What internal rate of return did Mr. Charles obtain on his investment? to. Effective monthly and Effective annually b) If the minimum attractive rate of return is 8% annual compound monthly cash for Mr. Charles's businesses, what can you recommend in this regard, support your answers?
Which of the following sets of Excel entries will correctly solve this problem: Jim paid $138,000 for an old house to renovate. He spent an average of $3,216 per quarter over the next two years as he readied the renovated house for sale. He wants to set the price of the house high enough so that he will earn an annual rate of return of 12% for his investment. Given that information, what price should Jim set on the house?
Your company, Dawgs "R" Us, is evaluating a new project involving the purchase of a new oven to bake your hotdog buns. If purchased, the new oven will replace your existing oven, which was purchased seven years ago for a total installed price of $1million. You have been depreciating the old oven on a straight-line basis over the expected life of 15 years to an ending book value of $250,000, even though you expect it to be worthless at the end of that 15-year period. The new oven will cost $2million and it will fall into the MACRS five-year depreciation class life. You cannot use bonus depreciation or Section 179 expensing on the new oven. If you purchase the new oven, you expect it to last for eight years. At the end of those eight years, you expect to be able to sell it for $100,000. (Note that both of the ovens, old and new, therefore have an effective remaining life of eight years at the time of the analysis.) If you do purchase the new oven, you estimate that you can sell…
Maria is a wedding planner. She purchases a laserjet printer for invitations, save-the-date postcards, etc. The laserjet costs $400. The laserjet has an expected life of 5 years; at the end of which time Maria expects a rebate of $20.00 when she turns in her old laserjet and purchases a new one. Maria uses the sum-of-the-years'-digits method to calculate depreciation.What is the annual depreciation in the first year?$What is the book value at the end of the second year?$What is the accumulated depreciation by the end of year 3?$
Pielago is in need of funds for the next 3 months. She badly needed P30,000,000 in cash because of an emergency. Pielago looked for the list of her family’s property and found a land which costs P50,000,000 and has a fair market value of P65,000,000. What do you think is the best money market security that suits Pielago’s case?