of a planning machine is by the Furniture Company. (There is an indefinite futur

ID: 2740488 • Letter: O

Question

of a planning machine is by the Furniture Company. (There is an indefinite future need for this type of ill cost $25,000 for installation and will have an estimated economic life of 11 years and a $2,200 MV at that time. It is estimated that annual expenses will average $12,000 per ear. The has a present BV of $5,500 and a present MV of $3000 Data for the defender for the next three years are given below. Using a before tax interest rate of 18% er year, make a Year MV at End of BV at End of Expenses during 1 S-2,000 $4,125 2,750 1,375 the Year $20,000 27,000 34,000 2,750 2 -3,500 Fia in the table for the EUAC values for the defender for years 1-3.(Round to the nearest dolar Year EUAG 2 Enter your answer in the edit fields and then click Check Answer Clear All

Explanation / Answer

Present machine – defender

Year

Capital recovery amount

Expenses for the year

Total

EUAC(18%)

3000(0.18) + (3000-2000)=1540

20000

21540

2000(0.18) + (2000-2750) = -390

27000

27390

2750(0.18) + (2750 – 3500) = -255

34000

34255

Defender should be replaced in 1 year