Question
Jones Excavation Company is planning an investment of $246,700 for a bulldozer. The bulldozer is expected to operate for 1,000 hours per year for five
Jones Excavation Company is planning an investment of $246,700 for a bulldozer. The bulldozer is expected to operate for 1,000 hours per year for five years. Customers will be charged $145 per hour for bulldozer work. The bulldozer operator costs $32 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $10,000. The bulldozer uses fuel that is expected to cost $42 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 |
Question Content Area
a. Determine the equal annual net cash flows from operating the bulldozer.
| Cash inflows: | |||
| Fuel and labor costs per yearHours of operationMaintenance costs per yearTotal fuel and labor costs per hourHours of operation | Hours of operation | ||
| Fuel and labor costs per yearFuel cost per hourLabor cost per hourRevenue per hourRevenue per hour | $Revenue per hour | ||
| Fuel and labor costs per yearFuel cost per hourLabor cost per hourRevenue per yearRevenue per year | $Revenue per year | ||
| Cash outflows: | |||
| Fuel and labor costs per yearHours of operationMaintenance costs per yearTotal fuel and labor costs per hourHours of operation | Hours of operation | ||
| Annual net cash flowsFuel cost per hourRevenue per hourRevenue per yearFuel cost per hour | $Fuel cost per hour | ||
| Annual net cash flowsLabor cost per hourRevenue per hourRevenue per yearLabor cost per hour | Labor cost per hour | ||
| Annual net cash flowsRevenue per hourRevenue per yearTotal fuel and labor costs per hourTotal fuel and labor costs per hour | $Total fuel and labor costs per hour | ||
| Annual net cash flowsFuel and labor costs per yearRevenue per hourRevenue per yearFuel and labor costs per year | Fuel and labor costs per year | ||
| Annual net cash flowsMaintenance costs per yearRevenue per hourRevenue per yearMaintenance costs per year | Maintenance costs per year | ||
| Annual net cash flowsHours of operationRevenue per hourRevenue per yearRevenue per year | $Revenue per year |
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Detecting Accounting Fraud Analysis And Ethics
Authors: Cecil Jackson
1st Edition
0133078604, 9780133078602
