What is the economic service life

Assignment Help Financial Management

Reference no: EM131584096

A piece of equipment now is use at a plant has a market value of 12,000. This market value is expected to decline by 40% per period (from the previous period) until it reaches zero at the end of period 4. The forecasted operating and repair cost of the equipment for the next period is 35,000 and this is expected to grow at a rate of 20 percent per period. Applying an interest rate of 12%, answer the questions below.

a. What is the period cost of using the equipment just one more period?

b. What is the lowest period equivalent cost for keeping the equipment in operation for the economic service life?

c. What is the economic service life?

Reference no: EM131584096

Questions Cloud

Estimate the company net profit : The company’s net profit margin was 5% in 2008, and is expected to increase to 8% ??by 2011. Estimate the company’s net profit for 2011.

Compute jaedans debt and profitability ratios : Calculate Jaedan's free cash flow. Calculate Jaedan's liquidity. Compute Jaedan's debt and profitability ratios. Calculate Jaedan's market ratios.

What is addition to retained earnings : What is the addition to retained earnings?

Determine the point where the particle will hit the xy-plane : If a particle moving along a curved track (like a roller coaster) flies off the track, it continues in the direction of the tangent vector at the point.

What is the economic service life : What is the period cost of using the equipment just one more period? What is the economic service life?

Analyze and interpret primary and secondary sources : Create an argument through the use of historical evidence.Analyze and interpret primary and secondary sources.

Bonds issued elsewhere often have annual coupon payments : Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments.

Why do corporations issue common stock : Why do corporations issue common stock? What rights do stockholder have? What factors commonly influence a person's daily buying choices?

How could event in which exactly two sockets are defective : An experiment consists of selecting a package of five electrical sockets. The probability that any one electrical socket is defective is 10%.

User Account

All Pages