Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jones Excavation Company is planning an investment of $376,300 for a bulldozer. The bulldozer is expected to operate for 2,000 hours per year annual maintenance

image text in transcribedimage text in transcribedimage text in transcribed

image text in transcribed
image text in transcribed
image text in transcribed
Jones Excavation Company is planning an investment of $376,300 for a bulldozer. The bulldozer is expected to operate for 2,000 hours per year annual maintenance costing $20,000. The bulldozer uses fuel that is expected to cost $48 per hour of bulldozer operation. Present Value of an Annuitv of $1 at Combound Interest a. Determine the equal annual net cash flows from operating the bulldozer. b. Determine the net present value of the investment, assuming that the desired rate of return is 10%. Use the present value of an annuity of 1 table above. Round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. c. Should Jones invest in the bulldozer, based on this analysis? , because the bulldozer cost is the present value of the cash flows at the minimum desired rate of return of 10%. answer to the nearest whole number. hours Jones Excavation Company is planning an investment of $376,300 for a bulldozer. The bulidozer is expected to operate for 2,000 hours per year for six years. Customers will be charged $140 per hour for bulldozer work. The bulldozer operator costs $37 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $20,000. The bulldozer uses fuel that is expected to cost $48 per hour of bulldozer operation, a. Determine the equal annual net cash flows from operating the bulldozer. b. Determine the net present value of the investment, assuming that the desired rate of return is 10%. Use the present value of an annuity of $1 table above. Round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. c. Should Jones invest in the bulidozer, based on this analysis? , because the bulidozer cost is 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Xbrl Financial Reporting In The 21st Century

Authors: Bryan Bergeron

1st Edition

0471220779, 978-0471220770

More Books

Students also viewed these Accounting questions

Question

How much information can we consciously attend to at oncepg12

Answered: 1 week ago