What is net annual equivalent uniform annual cost

Assignment Help Business Economics
Reference no: EM13892164

You are considering the following two options:

Option 1. You continue to use an old machine tool that was bought four years ago for $15,000. It has been fully depreciated but can be sold today for $2,000. If kept, it could be used for 3 more years with proper maintenance and with some extra care. No salvage value is expected at the end of 3 years. The maintenance costs would run $10,000 per year for the old machine tool.

Option 2. The existing (old) machine tool can be sold today for $2,000. You purchase a brand new machine tool at a price of $20,000 to replace the present equipment. Because the nature of the product manufactured, it also has an expected economic life of 3 years, and will have a salvage value of $5,000 a the end of that time. With the new machine tool, the expected operating and maintenance costs (with the scrap savings) amount to $3,000 each year for 3 years.

What is the net annual equivalent uniform annual cost associated with replacing the old machine tools now at an interest rate of 15%. (i.e. annual cost of Option 1 - annual cost of Option 3 =net)?

Reference no: EM13892164

Questions Cloud

Job as a specialist in fighting forest fires : Sally and Joe recently graduated from college, both majoring in history. Joe took a prestigious job as a legal clerk. Sally took a job as a specialist in fighting forest fires. Both received additional training before entering their jobs. Who will li..
Partnership interest immediately after the distribution : Walter receives cash of $18,000 and land with a fair market value of $75,000 (adjusted basis of $50,000) in a current distribution. His basis in his partnership is $16,000. What amount of gain must Walter recognize as a result of the current distribu..
What is average number of efficiency units among immigrants : Suppose a worker’s skill is captured by his efficiency units of labor. The distribution of efficiency units in the population is such that worker 1 has one efficiency unit; worker 2 has two efficiency units, and so on. Assume there are no migration c..
There are two types of farming tractors on the market : There are two types of farming tractors on the market, the FT250 and the FT500. The only difference between the two is that the FT250 is more prone to accidents than the FT500. At these prices, 2,000 of each model are purchased each year. What is the..
What is net annual equivalent uniform annual cost : You continue to use an old machine tool that was bought four years ago for $15,000. It has been fully depreciated but can be sold today for $2,000. The existing (old) machine tool can be sold today for $2,000. You purchase a brand new machine tool at..
Based on your findings regarding leading indicators : You are in charge of making recommendations based on economic forecasts to upper management of your firm, which produces widgets, and employs 2,500 workers. What would you look for in terms of leading indicators (discuss at least three indicators), a..
Law of diminishing marginal utility : (Law of diminishing Marginal Utility) Some restaurants offer "all you can eat" meals. How is this practice related to diminishing marginal utility? What restrictions must the restaurant impose on the customer in order to make a profit?
Graham field health products operates in what kind of market : Graham field health products make hospital beds and wheelchairs from component parts and materials it buys. it sells products to hospitals nursing homes and retailers of healthcare products. graham field health products operates in what kind of marke..

Reviews

Write a Review

Business Economics Questions & Answers

  Plot the forecasts against the realizations are the forecas

Plot the forecasts against the realizations. Are the forecasts good?

  Q1 the long heel press produces memo pads in its local shop

q1. the long heel press produces memo pads in its local shop. the corporation can lease its paraphernalia and hire

  Interested in buying two types of goods

Sam is interested in buying two types of goods, x and y. He can either use all his income to buy 3 units of x and 9 units of y, or 9 units of x and 3 units of y. If he spends all his income on x, how many units can he buy?

  Fed buy government securities during a recession

If the economy is facing rising levels of inflation, what would the Fed do with its three monetary control tools? Why does the Fed buy government securities during a recession?

  Interest rate compounded monthly for saving account

Enrico Suarez just graduated with a B.S.in engineering and landed a new job with a starting annual salary of 48,000.there are number of things that he would like to do with his new found ”wealth”. For starters, he needs to begin repaying his student ..

  What was the workers marginal product last year

The HRB Corporation is the world’s only manufacturer of air filters for Zamboni engines. Last year, HRB charged $20 per filter and sold 1 million of them, and it paid all of its production workers $10 per hour. What was the workers’ marginal product ..

  What factor does this firm mark up price over marginal cost

A firm has $1,900,000 in sales, a Lerner index of 0.55, and a marginal cost of $50, and competes against 800 other firms in its relevant market. What price does this firm charge its customers? By what factor does this firm mark up its price over marg..

  Evaluate the options for solving the problem

Generate options for solving the problem in the scenario. Evaluate the options for solving the problem. Decide on the best option for solving the problem. Explain how you will implement the decision made and reflect on whether this option was the mos..

  Classical economic model and the keynesian economic model

Conduct a thorough analysis of both the classical economic model and the Keynesian economic model. Describe the impact on the aggregate demand and supply curves, along with the impact on inflation and unemployment.

  Monitoring temperatures during transit

Atlas Transportation is considering installing temperature logger in all its refrigerated trucks for monitoring temperatures during transit. If the systems will reduce insurance claims by $40,000 per year for 5 years how much should the company be wi..

  How changes in supply was perfectly inelastic

how will my answers change if supply was perfectly inelastic. If supply was perfectly elastic. If demand was perfectly inelastic. If demand was perfectly elastic.

  Major component of human resource systems

Explain how Strategic Compensation is a major component of human resource systems. In your discussion include the four aspects:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd