Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please show work Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be

image text in transcribedplease show work

Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Machine A could be purchased for $42,000. It will last 10 years with annual maintenance costs of $1,400 per year. After 10 years the machine can be sold for $4,410. Machine B could be purchased for $35,000. It also will last 10 years and will require maintenance costs of $5,600 in year three, $7,000 in year six, and $8,400 in year eight. After 10 years, the machine will have no salvage value. Required: Assume an interest rate of 8% properly reflects the time value of money in this situation and that maintenance costs are paid at the end of each year. Ignore income tax considerations. Calculate the present value of Machine A & Machine B. Which machine Esquire should purchase? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) PV Machine A Machine B Esquire should purchase Machine B

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_2

Step: 3

blur-text-image_3

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

Operational Auditing A Complete Guide

Authors: Gerardus Blokdyk

2019 Edition

0655515879, 978-0655515876

More Books

Students also viewed these Accounting questions

Question

Use the square root property to solve each equation. (x-4) = 64

Answered: 1 week ago