The factory manager is considering the following two quotes from two vendors for purchace and maintanance...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The factory manager is considering the following two quotes from two vendors for purchace and maintanance of an equipment. Vendor X's estimates are all in actual dollars, while Vendor Y's estimates are all in year-zero dollars. Initial cost Annual cost Service life (yrs) Salvage value 4 Vendor X $9,800 $3,900 10 $3,920 The manager uses a before-tax real interest rate of 10% per year for economic analysis. If inflation rate is expected to average 1.82% per year over the next ten years, which vendor should the manager select that will minimize the before-tax cost of ownwership? (b) The most economical alternative is OA. Vendor X OB. Vendor Y CRED (a) Calculate PW for each alternative (use negative sign for costs) The PW of Vendor X's estimates is $ The PW of Vendor Y's estimates is $ Vendor Y $11,800 $3,000 10 $4,720 (Round to the nearest whole number.) (Round to the nearest whole number.) The factory manager is considering the following two quotes from two vendors for purchace and maintanance of an equipment. Vendor X's estimates are all in actual dollars, while Vendor Y's estimates are all in year-zero dollars. Initial cost Annual cost Service life (yrs) Salvage value 4 Vendor X $9,800 $3,900 10 $3,920 The manager uses a before-tax real interest rate of 10% per year for economic analysis. If inflation rate is expected to average 1.82% per year over the next ten years, which vendor should the manager select that will minimize the before-tax cost of ownwership? (b) The most economical alternative is OA. Vendor X OB. Vendor Y CRED (a) Calculate PW for each alternative (use negative sign for costs) The PW of Vendor X's estimates is $ The PW of Vendor Y's estimates is $ Vendor Y $11,800 $3,000 10 $4,720 (Round to the nearest whole number.) (Round to the nearest whole number.)
Expert Answer:
Answer rating: 100% (QA)
a Calcul ate PW for each alternative use negative sign for costs The PW of Vendor X s estimate... View the full answer
Related Book For
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
Students also viewed these corporate finance questions
-
New Wave Shelving's Inventory Manager would like to start using an ABC inventory classification system. The following table shows the annual inventory usage of all the 19 component items that the...
-
Alhamra Enterprises would like to start a new product line will cost $30k today. The expected duration of the project is 8 years and discount rate is 15%. Cash inflows will be $20k per year for 8...
-
Your family would like to start a trading company in your country and hire you as accounting profession to make some important decisions such as using cash or accrual basis accounting, how often will...
-
Bookstores International, a bookstore chain, has been quite successful over the past few decades and is now in expansion mode. It typically approaches opening a new bookstore by first determining the...
-
Millbridge Animal Protective Services (MAPS) is planning its spring awards dinner as a fund- raising event. It is planning to charge each attendee $ 150. Feast Hall, the site of the dinner, will...
-
You are trying to choose between purchasing one of two machines for a factory. Machine A costs $15,000 to purchase and has a three-year life. Machine B costs $17,700 to purchase but has a four-year...
-
A distillation column at \(101.3 \mathrm{kPa}\) is separating a two-phase feed that is \(60.0 \%\) liquid, \(40.0 \mathrm{~mol} \%\) methanol, and \(60.0 \mathrm{~mol} \%\) water. Distillate product...
-
Whitehead, CPA, is planning the audit of a newly obtained client, Henderson Energy Corporation, for the year ended December 31, 2011. Henderson Energy is regulated by the state utility commission and...
-
Many people believe that ISO 14000 will have a larger impact on organizations than ISO 9000. Why do you think that might be true?
-
The Nelson Company has $1,302,000 in current assets and $465,000 in current liabilities. Its initial inventory level is $305,000, and it will raise funds as additional notes payable and use them to...
-
Shim Amon owns a small business that manufactures and sells freezers. He manufactures one standard freezer available for sale and he also manufactures custom freezers as special order for his...
-
A basketball star covers 2.50 m horizontally in a jump to dunk the ball. His motion through space can be modeled precisely as that of a particle at his center of mass. His center of mass is at...
-
Post Test Test I-A Instruction: Determine the following and present using the illustrated format. 1. Net Income after tax 2. Balance Sheet Income Statement Data: Revenue - 2,588,000 Cost goods sold =...
-
Concorde Industries provided the following information about its standard costing system for 2019: Standard Data Actual Data Labor 2 hrs. @ Php21 per hr. Produced 8,000 units Budgeted fixed overhead...
-
Analyze the accounting challenges associated with cryptocurrency transactions in corporate financial statements. * NO AI ANSWERS * AI SOLUTIONS WILL BE REPORTED *
-
1. A dime is accidentally dropped from the top of the Empire State Building in Manhattan, New York. The height, h, in meters of the dime above the ground at t seconds can be modelled by 2 h(t)=- 4.9...
-
Assignment # 2 1. Identify two main installations formats that can be utilized to install MySQL 2. List the best practice for the protection of network connection and the to ensure the protection of...
-
If a and b are positive numbers, find the maximum value of f ( x ) = x a (9 x ) b on the interval 0 x 9.
-
Distinguish between managerial and financial accounting as to (a) Primary users of reports, (b) Types and frequency of reports, and (c) Purpose of reports.
-
(a) What is the present value of $30,000 due 8 periods from now, discounted at 8%? (b) What is the present value of $30,000 to be received at the end of each of 6 periods, discounted at 9%?
-
Antwon Electronics Inc. produces and sells two models of pocket calculators, XQ-103 and XQ-104. The calculators sell for $12 and $25, respectively. Because of the intense competition Antwon faces,...
-
Use the following data to prepare a statement of retained earnings for Barney Corporation. Total retained earnings originally reported at January 1... Cash dividends declared during the year. Net...
-
Bernard Corporation has the following shares outstanding: 8,000 shares of \(\$ 50\) par value, six percent preferred stock and 50,000 shares of \(\$ 1\) par value common stock. The company has \(\$...
-
Inland Corporation issued 30,000 shares of \(\$ 5\) par value common stock at \(\$ 15\) per share and 8,000 shares of \(\$ 50\) par value, eight percent preferred stock at \(\$ 85\) per share. Later,...
Study smarter with the SolutionInn App