An asset for drilling was purchased and place in service by a petroleum production company. Its initial investment is P60,000 and it has an estimated salvage value of P12,000 at the end of an estimated useful life of 14 years. Compute the book value at the end of the 5th year of life using SLM. a. P48,257.00 b. P42,857.00 c. None of the above d. P45,572.00

An asset for drilling was purchased and place in service by a petroleum production company. Its initial investment is P60,000 and it has an estimated salvage value of P12,000 at the end of an estimated useful life of 14 years. Compute the book value at the end of the 5th year of life using SLM. a. P48,257.00 b. P42,857.00 c. None of the above d. P45,572.00

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2E

See similar textbooks

Similar questions

An asset for drilling was purchased and place in service by a petroleum production company. Its initial investment is P50,000 and it has an estimated salvage value of P15,000 at the end of an estimated useful life of 10 years. Compute the book value at the end of the 5th year of life using Sinking Fund Method at 10% interest, using Declining Balance Method and Double Declining Balance Method.
During its acquisition, a machine was bought for P150,000. After 12 years of life, its salvage value was given at P20,000. What will be its book value after 6 years using the SLM? Add your answer
A new tablet cost $1,323 with a negligible salvage value in 3-years. Using double declining balance (DDB) what is the Book Value of the tablet at the end of 3 years? Margin of error +/-1 Enter your value with 2 decimal places.
(Chapter 13) A $20,000 machine will be purchased by a company with an MARR of 10%. It will cost $5,000 to install and removal costs are insignificant. What is its economic life and minimum EUAC cost given the following O&M costs: YR, n 1 2 3 4 5 O&M $5,000 $8,000 $11,000 $14,000 $17,000
PLEASE WRITE YOUR SOLUTION ON A PAPER, THANK YOU A Contractor imported a bulldozer for his job, paying P 350,000 to the Manufacturer. Freight andInsurance charges amounted to P 18,000; customs’ broker’s fees and arrastre services, P 8,500;taxes, permits and other expenses, P 35,000. If the contractor estimates the life of the bulldozer tobe 10 years with a salvage value of P 20,000, determine the book value at the end of 8 years, a. using the Double Declining Balance Method. b. using the Declining Balance Method. c. using the Sinking Fund Method, i = 10% d. using the Sum of the Years Method
A tax duty free importation of a 30HP sandmill for paint manufacturing cost P360,000. Bank charges arrastre and brokerage cost P5,000. Foundation and installation costs were P25,000. Other incidental expenses amount to P20,000. Salvage value of the mill is estimated to be P60,000 after 20 years. Find the appraisal value of the mill using SLM at the end of 10 years. 4.
A special-purpose milling machine was purchased four years ago for $20,000. It was estimatedat that time that this machine would have a life of10 years, a salvage value of $1,000, and a cost ofremoval of $1,500. These estimates are still good.This machine has annual operating costs of $2,000,and its current book value is $13,000 (based on“alternative MACRS,” a straight-line depreciationwith a half-year convention with zero salvage value).If the machine is retained for its entire 10-year life,the remaining annual depreciation schedule would be$2,000 for years 5 through 10. A new machine that ismore efficient will reduce operating costs to $1,000,but it will require an investment of $12,000. The lifeof the new machine is estimated to be six years with asalvage value of $2,000. The new machine would fallinto the five-year MACRS property class. An offerof $6,000 for the old machine has been made, andthe purchaser would pay for removal of the machine.The firm’s marginal tax rate is 40%, and…
8. Saudi Post can sell envelopes for $0.2 per envelope. These envelopes are made using machines that cost $100,000 and have no salvage value at the end of 10 years. The equipment's annual operating costs will be $7,000 per year plus $0.11 per envelope produced. MARR is 12%lyear. Determine the minimum number of envelopes that Saudi Post must produce to breakeven. (select the closest answer) a. 196,649 b. 54,885 c. 274,427 d. 315,964
An item's initial cost is P 800,000, and its market worth after 5 years is P 507,630. Determine the equipment's estimated salvage value.
9.16 You purchased a molding machine at a cost of $88,000. It has an estimated useful life of 12 ycars with a salvage value of $8,000. Determine the following: (a) The amount of annual depreciation computed by the straight-line method. (b) The amount of depreciation for the third year computed by using the double- declining-balance method.
An engineer bought equipment for P500,000. HE spent an additional amount of P30,000 for installation and other expenses. The estimated useful life of the equipment is 10 years. The salvage value is x% of the first cost. Using Straight line method of depreciation the book value at the of 5 years will be P291,500. What is the value of x? O 14.50 16.60 10.00 12.00
A 3-year old truck is being considered for early replacement. Its Current market value is $25,000. Estimated future market values and annual operating costs for the next 5 years are given in the following table. What is the ESL if i=10%? Year MV, $ AOC, $ 1 10,000-5,000 2 8,000 -6,500 3 6000 -8,000 4 2000 -9,500 0 -12,500 5 O 5 years O 4 years O 3 years 2 years