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How to solve the last problem? I have everything right except the last one (which is blank). Subject is Accounting. Net Present Value Method -

How to solve the last problem? I have everything right except the last one (which is blank). Subject is Accounting.image text in transcribedimage text in transcribedimage text in transcribed

Net Present Value Method - Annuity Jones Excavation Company is planning an investment of $125,000 for a bulldozer. The bulldozer is expected to operate for 1,000 hours per year for five years. Customers will be charged $90 per hour for bulldozer work. The bulldozer operator costs $30 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $7,500. The bulldozer uses fuel that is expected to cost $15 per hour of bulldozer operation. Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 2.855 2.589 5 4.212 3.791 3.605 3.353 2.991 6 4.917 4.355 4.111 3.785 3.326 7 5.582 4.868 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10 7.360 6.145 5.650 5.019 4.192 a. Determine the equal annual net cash flows from operating the bulldozer. Jones Excavation Company Equal Annual Net Cash Flows Jones Excavation Company Equal Annual Net Cash Flows Cash inflows: Hours of operation 1,000 Revenue per hour 90 Revenue per year 90,000 Cash outflows: Hours of operation 1,000 Fuel cost per hour 15 Labor cost per hour 30 Total fuel and labor costs per hour 45 Fuel and labor costs per year 45,000 Maintenance costs per year 7,500 Annual net cash flows 37,500 Feedback Check My Work a. Subtract the operating expenses (hourly fuel and labor costs, multiplied by the operating hours, plus the annual maintenance costs) from the revenues (operating hours multiplied by the hourly revenue). Maintenance costs per year 7,500 Annual net cash flows 37,500 Feedback Check My Work a. Subtract the operating expenses (hourly fuel and labor costs, multiplied by the operating hours, plus the annual maintenance costs) from the revenues (operating hours multiplied by the hourly revenue). b. Determine the net present value of the investment, assuming that the desired rate of return is 10%. Use the table of present value of an annuity of $1 table above. Round to the nearest dollar. Present value of annual net cash flows $ 142,163 Amount to be invested 125,000 17,163 Net present value c. Should Jones Invest in the bulldozer, based on this analysis? Yes . because the bulldozer cost is less than the present value of the cash flows at the minimum desired rate of return of 10%. d. Determine the number of operating hours such that the present value of cash flows equals the amount to be invested. Round interim calculations and final answer to the nearest whole number. hours Previous

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