Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jones Excavation Company is planning an investment of $ 8 2 7 , 4 0 0 for a bulldozer. The bulldozer is expected to operate

Jones Excavation Company is planning an investment of $827,400 for a bulldozer. The bulldozer is expected to operate for 3,000 hours per year for 7 years. Customers will be charged $140 per hour for bulldozer work. The bulldozer operator costs $28 per hour in wages and benefits. The bulldozer is expected to require annual maintenance costing $30,000. The bulldozer uses fuel that is expected to cost $37 per hour of bulldozer operation.
Present Value of an Annuity of $1 at Compound Interest
Year 6%10%12%15%20%
10.9430.9090.8930.8700.833
21.8331.7361.6901.6261.528
32.6732.4872.4022.2832.106
43.4653.1703.0372.8552.589
54.2123.7913.6053.3532.991
64.9174.3554.1113.7853.326
75.5824.8684.5644.1603.605
86.2105.3354.9684.4873.837
96.8025.7595.3284.7724.031
107.3606.1455.6505.0194.192
Question:
Revenue per hour
\times $Revenue per hour
140
Revenue per year
$Revenue per year
420,000
Cash outflows:
Hours of operation
Hours of operation
3,000
Fuel cost per hour
$Fuel cost per hour
37
Labor cost per hour
Labor cost per hour
28
Total fuel and labor costs per hour
\times $Total fuel and labor costs per hour
65
Fuel and labor costs per year
Fuel and labor costs per year
195,000
Maintenance costs per year
Maintenance costs per year
30,000
Annual net cash flows
$Annual net cash flows
195,000
Feedback Area
Feedback
Question Content Area
1. 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.
fill in the blank of
hours
image text in transcribed

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

Cornerstones of Managerial Accounting

Authors: Mowen, Hansen, Heitger

3rd Edition

324660138, 978-0324660135

More Books

Students also viewed these Accounting questions