QUESTION 3 Capitalized cost is an application of perpetuity. It is the sum of the first cost and the present worth of all future payments and replacements. A machine costs P300,000 new, and must be replaced at the end of each 15 years. If the annual maintenance required is P5,000, find the capitalized cost, if money is worth 5% and the salvage value is P50,000. First Cost Present worth of the annual maintenance cost *Letters only Perpetuity of the depreciation cost Capitalized cost a. 178,700 b. 231,700 c. 321,500 d. 400,500 e. 127,700 a. 372,700 b. 441,700 c. 529,500 d. 609,500 e. 631,700

QUESTION 3 Capitalized cost is an application of perpetuity. It is the sum of the first cost and the present worth of all future payments and replacements. A machine costs P300,000 new, and must be replaced at the end of each 15 years. If the annual maintenance required is P5,000, find the capitalized cost, if money is worth 5% and the salvage value is P50,000. First Cost Present worth of the annual maintenance cost *Letters only Perpetuity of the depreciation cost Capitalized cost a. 178,700 b. 231,700 c. 321,500 d. 400,500 e. 127,700 a. 372,700 b. 441,700 c. 529,500 d. 609,500 e. 631,700

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 15PROB

See similar textbooks

Similar questions

EQUIVALENT ANNUAL ANNUITY Faleye Consulting is deciding which of two computer systems to purchase. It can purchase state-of-the-art equipment (System A) for 21,000, which will generate cash flows of 6,000 at the end of each of the next 6 years. Alternatively, the company can spend 11,000 for equipment that can be used for 3 years and will generate cash flows of 6,000 at the end of each year (System B). If the company's WACC Is 10% and both "projects" can be repeated indefinitely, which system should be chosen, and what is its EAA?
Capitalized cost is an application of perpetuity. It is the sum of the first cost and the present worth of all future payments and replacements. A machine costs P300,000 new, and must be replaced at the end of each 15 years. If the annual maintenance required is P5,000, find the capitalized cost, if money is worth 5% and the salvage value is P50,000.
Present Value Computations Assuming that money is worth 10%, compute the present value of: 1. $14,000 received 15 years from today. $Answer 2. The right to inherit $4,000,000 14 years from now. $Answer 3. The right to receive $10,000 at the end of each of the next six years. $Answer 4. The obligation to pay $9,000 at the end of each of the next 10 years. $Answer 5. The right to receive $18,000 at the end of the 7th, 8th, 9th, and 10th years from today. $Answer
Present Value ComputationsAssuming that money is worth 10%, compute the present value of Round answers to the nearest whole number. 1. $11,000 received 15 years from today. $Answer 2. The right to inherit $2,000,000 14 years from now. $Answer 3. The right to receive $5,000 at the end of each of the next six years. $Answer 4. The obligation to pay $7,000 at the end of each of the next 10 years. $Answer 5. The right to receive $9,000 at the end of the 7th, 8th, 9th, and 10th years from today. $Answer
Answer letter C only Pamantasan ng Lungsod ng Maynila buys a solar panel unit for P105,000. The shipping and installation fees amount to P15,000. If the unit is expected to last for 15 years, with a salvage value of P3,000, what is the depreciation charge during the 12th year, and the book value at the end of 14 years by the (a) Declining balance method, (b) DDB method, (c) sinking fund method given interest rate at 12.5 percent, and (d) Sum-of-the-Years Digit(SYD) Method
#1) Time value: Annuities Marian Kirk wishes to select the better of two 10-year annuities,C and D. Annuity C is an ordinary annuity of $2,500 per year for 10 years. AnnuityD is an annuity due of $2,200 per year for 10 years.a. Find the future value of both annuities at the end of year 10 assuming that Mariancan earn (1) 10% annual interest and (2) 20% annual interest.c. Find the present value of both annuities, assuming that Marian can earn (1) 10%annual interest and (2) 20% annual interest. #2) Retirement planning Hal Thomas, a 25-year-old college graduate, wishes to retire atage 65. To supplement other sources of retirement income, he can deposit $2,000each year into a tax-deferred individual retirement arrangement (IRA). The IRA willearn a 10% return over the next 40 years.a. If Hal makes annual end-of-year $2,000 deposits into the IRA, how much will hehave accumulated by the end of his sixty-fifth year?b. If Hal decides to wait until age 35 to begin making annual end-of-year…
10. A house constructed at the cost of ₱112,500 is expected to last 30 years, at the end of which time its renewal cost will be ₱60,000 annual repairs and maintenance are ₱4,500. What is the capitalized cost of the house at an interest of 6%? Solve and show the solution.
5. A concrete road requires no upkeep until the end of 3 years when P54, 000 will be needed for repairs. After this P93, 000 will be needed for repairs at the end of each year for the next 6 years, then P125, 000 at the end of each year for the next 5 years. If money is worth 15% compounded annually, what was the equivalent uniform annual cost for the 14-year period?
5. Calculate the Total Fixed Cost from the following information; A farmer had borrowed $50,000 term loan at 7% interest and purchased the mini tractor and expected to last for 10 years. At the end of the 10th year its salvage value would amount to $5,000. The farmer is also servicing $200 and $150 as insurance premium and annual property tax respectively.
45 At 7.5%, a bridge cost P 200M with a life of 23 years. The bridge must be partially rebuilt at a cost of P 140 M at the end of each 23 years. Calculate the capitalized cost if an annual maintenance of P 590,000 is required. Express your answer in whole number.