What is the annual equivalent cost of purchasing a lift truck that has an initial cost of $85,000, an annual operating cost of $13,500, and an estimated salvage value of $23,000 after six years of use at an annual interest rate of 6%?XMore InfoEqual Payment SeriesSingle PaymentCompound PresentAmount WorthCompoundAmountFactor(F/A, I, N)Sinking PresentFund WorthFactor FactorCapitalRecoveryFactor(A/P, i, N)FactorFactor(F/P, i, N)(P/F, i, N)(A/F, i, N)(P/A, i, N)1.08000.94341.00001.00000.94341.08001.12380.89002.08000.48541.83340.54541.19100.83963.18360.31412.67300.37411.26250.79214.37460.22883.48610.28861.33820.74735.63710.17744.21240.23741.41850.70506.97530.14344.91730.20340.68518.39380.11915.58240.17911.50381.59381.68950.62749.89750.10106.20980.16100.591911.49130.08706.80170.14701.79080.558413.18080.07597.38010.1359SAWNIN123456789910

Annual Equivalent Cost (EAC) refers to the value which shows the estimated annual expense for…

What is the annual equivalent cost of purchasing a lift truck that has an initial cost of $85,000, an annual operating cost of $13,500, and an estimated salvage value of $23,000 after six years of use at an annual interest rate of 8%? - X More Info

What is the annual equivalent cost of purchasing a lift truck that has an initial cost of $85,000, an annual operating cost of $13,500, and an estimated salvage value of $23,000 after six years of use at an annual interest rate of 8%? - X More Info

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 4BE: Internal rate of return A project is estimated to cost 463,565 and provide annual net cash flows of...

See similar textbooks

Related questions

Q: How many monthly payments remain to be paid on an 8% mortgage with a 30-year amortization and…

A: Net present worth (NPV) is the difference between the ongoing worth of cash inflows and the ongoing…

Q: Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in…

A: The following information given in the question: 1. Price of both stock X and Y are same $25 2.…

Q: atement regarding value of a firm is correct? Select one: a. Firm value is created when the firm…

A: The cost of capital is indeed the minimal rate of return a company must achieve before it may…

Q: I don't understand when you say that the call option or short option will go in the direction of…

A: Hedging with forex is a method for protecting a currency pair's position against a negative move and…

Q: 14. AT Steel currently has no debt and an equity cost of capital of 14%. Suppose that the company…

A: The weighted average cost of capital (WACC) : WACC is the combination of costs of a company from…

Q: Round all answers to the nearest cent. 1. Chris is 33 years old. He wants to retire when he is 60.…

A: We will have to use the concept of time value of money. As per the concept of time value of money…

Q: How much would $5,000 due in 10 years be worth today if the discount rate were 5.5%?

A: Information Provided: Years = 10 Future value = $5000 Discount rate = 5.5% NOTE: As per our…

Q: The Federal Reserve recently shifted its monetary policy causing Lasik Vision’s WACC to change.…

A: The question is related to Net Present Value. Net Present Value is calculated with the help of…

Q: Which of the following is not an asset utilization ratio

A: Asset Utilization Ratio: This ratio computes the total sales/revenue earned for every dollar of…

Q: A man borrows money from a bank but he only received 83% of the amount requested. He signs a…

A: Simple interest rate is computed on the principal portion of the amount borrowed. Unlike compound…

Q: 1. Which of the following investment has the highest effective annual rate ( EAR)? a. An investment…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: The current yield curve for default-free zero-coupon bonds is as follows: Maturity (Years) Spot…

A: Spot rates for the 3 years have been provided in the question, we will use the same to calculate the…

Q: Our home loan, based on a rate of 3.24% APR compounded monthly, required 30 years of monthly…

A: Solution:- When an amount is borrowed, it can either be repaid as a lump sum payment or in…

Q: Stock 1 Stock 2 Realized Realized Year End Return Return 2004 20.1% -14.6% 2005 72.7% 4.3% 2006…

A: Here, Year Stock 1 Return Stock 2 Return 2004 20.10% -14.60% 2005 72.70% 4.30% 2006 -25.70%…

Q: The maintenance costs of a new boiler are estimated as follows: P 600 per year for the first 3…

A: As per question , we are provided : Future value of all maintenance = P20000 Compounding rate = 6%…

Q: Which one of the following would NOT result in incremental cash flows and thus should NOT be…

A: Incremental cash flow refers to the change in a project or a company’s cash flow due to a decision…

Q: The current price of gold is $300 per ounce. Carrying costs in total are 0.5% (not including…

A: Many Thanks for Question: Bartleby's Guideline “Since you have posted a question with multiple…

Q: Part 1. Doon opened a shop on 1 December 20X0 with capital of £10,000. In her first year of trading…

A: As per Bartleby honor code, when multiple independent questions are asked, the expert is required…

Q: Suppose you manage an equity fund with the following securities. A client invests partially in your…

A: The expected return and the standard deviation of the portfolio: The expected return of a portfolio…

Q: PLS ANSWER ASAP The source of funds for capital investment, which would hold true for all…

A: Solution:- Minimum Acceptable Rate of Return (MARR) or cost of capital is the rate of return…

Q: Explain how Family firm image drives financial performance?

A: Financial management is a department inside a company or organisation that manages cash flow,…

Q: Which of the following item is not used in equity-based valuation models? Select one: a. Working…

A: Equity valuation models refers to the various stock valuation methods used by an investor to compute…

Q: Discuss the implications of the efficient market hypothesis for financial managers and security…

A: An efficient market hypothesis is defined as the hypothesis, which used to state that the share…

Q: Define the term financial ratio.

A: Financial ratio : Financial ratio used to determined the performance of business by comparing two…

Q: You take out a 360-month fixed-rate mortgage for $100,000 with a monthly interest rate of 0.4%. Part…

A: Mortgage/ Borrowings: Borrowings are the loan which is taken by the individual to meet its…

Q: Most managers try to "smooth" their dividends over time - they try to increase the dividend, but…

A: The dividends is the distribution of surplus profit by a company to its shareholders. It is given as…

Q: You purchase a washing machine and dryer for P750. You pay 20% down and agree to repay the balance…

A: The time value of money concept is applied in the case of the calculation of interest. Compounding…

Q: All of the following points are true regarding the key principles of forecasting except: Select…

A: The technique of assessing or projecting how a corporation will perform in the future is known as…

Q: what is the present value of the perpetuity?

A: Present Value: It represents the present worth of the perpetual/constants cash flows. It is…

Q: Weston Corporation just paid a dividend of $2.5 a share (i.e., D0 = $2.5). The dividend is expected…

A: The question is related to Dividend Growth model. D0 = $2.5 D1 = D0 × (1 + g) and so on D0 = Just…

Q: na wants to borrow $45 000 to purchase some shar erest charged for the following options: Balance…

A: The loan carry the payment of interest that is to be paid over the period of time it depends the…

Q: You are evaluating a project that will cost $502,000, but is expected to produce cash flows of…

A: 1. Pay back period is the length of time required to recover the cost of Investment. It is…

Q: 10 [9] Tory signed a 10-yr contract to play for a football team at a salary of $5,000,000 per year.…

A: Time value of money (TVM) refers to the method or technique which is used to measure the amount of…

Q: 4. Which of the following statements is FALSE? A) A stock's return is perfectly positively…

A: Return on stock is the return that is gained by the investor for an investment in stock.

Q: You are the CEO of a company that has been the subject of a hostile takeover. Thibeaux Piques has…

A: Share buy back- Under this type of transaction, a company buy back its own shares from the share…

Q: er a P1,000 par value bond issued by MERALCO with maturity date of 2026 and a stated coupon rate of…

A: Price of bond is present value of coupon payments and the present value of par value of bond on…

Q: Which company is most likely closest to filing for bankruptcy in the near term? A) Company A which…

A: Bankruptcy is a negative situation for a business. This is the situation under which business is not…

Q: An amortized loan means that the principal is gradually paid off during the life of the loan. True…

A: The question is related true or false.

Q: a service car whose cash price was P540,000 was brought with a down payment of P162,000 and monthly…

A: In finance capital recovery factor is an important concept. It is the ratio that is used to…

Q: A monthly perpetuity of $100 will start 6 months from today. If the discount rate is 6% APR…

A: Interest rate = 6% p.a. compounding monthly I.e. 6/12 = 0.5% for one month Monthly payment amount =…

Q: A project has an initial cost of $50,000, expected net cash inflows of $9,000 per year for 10 years,…

A: Given: Year Particulars Amount 0 Initial cost -$50,000 1 Cash inflows $9,000 2 Cash inflows…

Q: As an investment advisor, you have been approached by a client called Ramesh, who wants some help in…

A: Salary = 400000 Salary expected increment per year = 12% Expected years Person R will render service…

Q: How much should Brianna have in a savings account that is earning 2.50% compounded semi-annually, if…

A: We need to use present value of ordinary annuity formula to calculate amount in account today to…

Q: a. Calculate the accumulated balance in her investment fund at the end of 9 years. $0.00 Round to…

A: Future Value: It represents the future worth of the present amount of cash flows. It is computed…

Q: a) When you retire 40 years from now, you want to have $1.2 million. You think you can earn an…

A: Present value of future value With interest rate (i), period (n) and future value (FV), the present…

Q: A loan of P3,000 is repaid by a payment of P3,500 made 24 months later. What is the annual…

A: Loans payment carry the payment of principal amount and also payment of principal amount also.

Q: Milton Industries expects free cash flows of $14 million each year. Milton's corporate tax rate is…

A: Given: Particulars Amount Free cash flows $14 Million Tax rate 21% Unlevered cost of…

Q: Calculate a firm's free cash flow if it has net operating profit after taxes of R60,000,…

A: Free cash flow to the firm (FCFF) represents the cash flow from operations available for…

Q: The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 16%, its…

A: WACC can be calculated as: = (Weight of equity * Cost of equity) + (Weight of debt * Cost of debt)

Q: ity (1000 kg product per year) has an d variable costs are 61 per cent of ne it (ie, profit per kg…

A: Break even point = Fixed cost / Contribution margin

Question

What is the annual equivalent cost of purchasing a lift truck that has an initial cost of $85,000, an annual operating cost of $13,500, and an estimated salvage value of $23,000 after six years of use at an annual interest rate of 6%?
X
More Info
Equal Payment Series
Single Payment
Compound Present
Amount Worth
Compound
Amount
Factor
(F/A, I, N)
Sinking Present
Fund Worth
Factor Factor
Capital
Recovery
Factor
(A/P, i, N)
Factor
Factor
(F/P, i, N)
(P/F, i, N)
(A/F, i, N)
(P/A, i, N)
1.0800
0.9434
1.0000
1.0000
0.9434
1.0800
1.1238
0.8900
2.0800
0.4854
1.8334
0.5454
1.1910
0.8396
3.1836
0.3141
2.6730
0.3741
1.2625
0.7921
4.3746
0.2288
3.4861
0.2886
1.3382
0.7473
5.6371
0.1774
4.2124
0.2374
1.4185
0.7050
6.9753
0.1434
4.9173
0.2034
0.6851
8.3938
0.1191
5.5824
0.1791
1.5038
1.5938
1.6895
0.6274
9.8975
0.1010
6.2098
0.1610
0.5919
11.4913
0.0870
6.8017
0.1470
1.7908
0.5584
13.1808
0.0759
7.3801
0.1359
SAWNIN
1
2
3
4
5
67899
10

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and provide the following cash flows over the next five years: $88,000, 92,000, $91,000, $72,000, and $71,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel, see Appendix C.
Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the following cash flows over the next five years: $99,000, $88,000, $92,000. $87,000, and $72,000. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return in Excel. see Appendix C.
Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
Average rate of returncost savings Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of 125,000 with a 15,000 residual value and an eight-year life. The equipment will replace one employee who has an average wage of 28,000 per year. In addition, the equipment will have operating and energy costs of 5,150 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.
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.
Net present value method for a service company Coast-to-Coast Inc. is considering the purchase of an additional delivery vehicle for 70,000 on January 1, 20Y1. The truck is expected to have a five-year life with an expected residual value of 15,000 at the end of five years. The expected additional revenues from the added delivery capacity are anticipated to be 65,000 per year for each of the next five years. A driver will cost 40,000 in 20Y1, with an expected annual salary increase of 2,000 for each year thereafter. The annual operating costs for the truck are estimated to be 6,000 per year. a. Determine the expected annual net cash flows from the delivery truck investment for 20Y120Y5. b. Compute the net present value of the investment, assuming that the minimum desired rate of return is 12%. Use the present value table appearing in Exhibit 2 of this chapter. c. Is the additional truck a good investment based on your analysis? Explain.
Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
Net present value methodannuity for a service company Amenity Hotels Inc. is considering the construction of a new hotel for 50 million. The expected life of the hotel is 25 years, with no residual value. The hotel is expected to earn revenues of 30 million per year. Total expenses, including depreciation, are expected to be 23 million per year. Amenity Hotels management has set a minimum acceptable rate of return of 14%. a. Determine the equal annual net cash flows from operating the hotel. b. Compute the net present value of the new hotel, using the present value of an annuity table found in Appendix A. Round to the nearest million dollars. c. Does your analysis support construction of the new hotel? Explain.
Cash payback period for a service company Janes Clothing Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of 975,000 and each with a seven-year life and expected total net cash flows of 1,050,000. Location 1 is expected to provide equal annual net cash flows of 150,000, and Location 2 is expected to have the following unequal annual net cash flows: Determine the cash payback period for both location proposals.