The First cost of a passenger bus is P800,000. Its estimated life is 4 years with no salvage value. The operating cost per year of 300 days of operation are as follows: Tires, P24,000; gasoline, 60 liters per day at P15 per liter; Oil, P80 per day; maintenance and repair, P40,000; labor P800 per day; miscellaneous expense, P18,000; depreciation, sinking fund at 10%. If the average passenger fare is P3.50 for each passenger one way and expected profit or return is 15% determine the minimum average number of passengers that should be transported each day. Use the Future worth method.
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- You are evaluating two different silicon wafer milling machines. The Techron I costs $228,000, has a three-year life, and has pretax operating costs of $59,000 per year. The Techron II costs $400,000, has a five-year life, and has pretax operating costs of $32,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $36,000. If your tax rate is 24 percent and your discount rate is 8 percent, compute the EAC for both machines. Note: Your answer should be a negative value and indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.An equipment was purchased now at P10,000,000.00 prevailing interest rate is 10% per year. Solve the following cases capitalized cost: Solve for case 2 if the machine on item 1.1 is to be replaced every end of 10 years at 10% worth of money. Salvage cost is zero.An asset costing P20,000 was purchased 3 years ago. At that time it was estimated that it would have a 5 year life and salvage value of P5,000. Consideration is being given to replacing it with a new asset costing P25,000 and a trade in of P6,000 will be allowed on the old one. If straight line depreciation has been used for accounting purpose, what is the sunk costs?
- Liberty Airways is considering an investment of$800,000 in ticket purchasing kiosks at selected airports.The kiosks (hardware and software) have an expectedlife of four years. Extra ticket sales are expected to be60,000 per year at a discount price of $40 per ticket.Fixed costs, excluding depreciation of the equipment,are $400,000 per year, and variable costs are $24 perticket. The kiosks will be depreciated over four years,using the SL method with a zero salvage value. Theonetime commitment of working capital is expected tobe 1/12 of annual sales dollars. The after-tax MARR is15% per year, and the company pays income tax at therate of 34%. What’s the after-tax PW of this proposedinvestment? Should the investment be made?install cost of the new machinery is $400,000 and is expected to last for 5 years. The salvage value is expected to be $30,000 in today’s dollars. Revenue is expected to increase by $40,000 while operating costs are expected to increase $2500 (both actual). Determine the present worth of the project, assuming an (actual) MARR of 10%, a CCA rate of 10% and a corporate tax rate of 15%.Power to a remote transmitting station is provided by a diesel-electric generator unit. The original cost of the unit P65,000. It costs P2,000 to ship the unit to the job site An additional cost of P3,000 was incurred for installation. (a) Determine the annual depreciation cost by the straight line method, if the unit has an expected life of 10 years. The salvage value of the unit at the end of its life was estimated at P5,000. (b) Determine the annual depreciation cost by the sinking fund method. Assume that the annual charge for depreciation was deposited in a fund drawing compound interest at the rate of 5%
- Tanaka Industrial Systems Company is trying to decide between two different conveyor belt systems. System A costs $275,000, has a 4-year life, and requires $81,000 in pretax annual operating costs. System B costs $355,000, has a 6-year life, and requires $75,000 in pretax annual operating costs. Both systems are to be depreciated straight-line to zero over their lives and will have zero salvage value. Suppose the company always needs a conveyor belt system; when one wears out, it must be replaced. Assume the tax rate is 22 percent and the discount rate is 9 percent. Calculate the EAC for both conveyor belt systems.ABZ & Company purchased a factory machine of Php. 51,000 on January 1, 2015. The machine is expected to have a salvage value of Php. 6,000 at the end of its 5 year useful life. During the useful life, the machine is expected to be used for 5,000 hours. The machine was used as under, solve using straight-line method:An industrial plant bought a generator set for Php 350,000.00. Other expenses including installation amounted to Php 100,000.00. The genset has an estimated economic life up to 10 years with a salvage value at the end of its life of PhP5,000.00. Determine the book value at the 8th year using the declining balance method. Answer in two decimal places.
- An $80,000 baling machine for recycled paper was purchased by the XYZ company two years ago. The current MV of the machine is $50,000, and it can be kept in service for seven more years. MARR is 12% per year and the projected net annual receipts (revenues less expenses) and end-of-year market values for the machine are shown below. When is the best time for the company to abandon this project? END OF YEAR 1 2 3 4 5 6 7 Net annual receipts $20,000 $20,000 $18,000 $15,000 $12,000 $6,000 $3,000 Market value 40,000 32,000 25,000 20,000 15,000 10,000 5,000Peabody Corporation has the following base-case estimates for its new smallengine assembly project:• Price per un it= $500• Variable costs = $120 per unit• Fixed costs = $2.5 million• Demand = 20,000 units per year• Capital investment = $8 million a1 year 0• Product life = 8 years• Salvage value = $500,000• Depreciation method =seven-year MACRS• Tax rate= 35%• MARR = l2%Suppose the company believes that all of its estimates (except the product life, depreciation method, tax rale, and MARR) are accurate only 10 within ±20%.(a) What is the NPW of the project based on its base-case scenario?(b) What is the NPW of the project based on its best-case scenario?(c) What is the worst-case scenario?(d) What conclusion would you make about the project after seeing the scenario analyses?Henredon purchases a high-precision programmable router for shaping furniture components for $190,000. It is expected to last 12 years and have a salvage value of $5,000. It will produce $45,000 in net revenue each year during its life. Corporate income taxes are 40 percent, and the after-tax MARR is 10 percent. Determine the ATCF for each year and the after-tax PW, AW, IRR, and ERR, if the router is kept for 12 years.