Five (5) years ago, your company purchased a skid-steer loader at the beginning of your construction project in order to save on labor costs. The original purchase price was $36,000. The project ends in two (2) years which coincides with the end of the useful life of the skid-steer. The annual capital cost is $6,780 at i = 10%, in line with the original estimate when the skid-steer was purchased. A) Draw the Cash Flow Diagram B) What is the salvage value of the skid- steer at the end of its useful life?

Five (5) years ago, your company purchased a skid-steer loader at the beginning of your construction project in order to save on labor costs. The original purchase price was $36,000. The project ends in two (2) years which coincides with the end of the useful life of the skid-steer. The annual capital cost is $6,780 at i = 10%, in line with the original estimate when the skid-steer was purchased. A) Draw the Cash Flow Diagram B) What is the salvage value of the skid- steer at the end of its useful life?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 22P: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,...

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The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
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Five (5) years ago, your company purchased a skid-steer loader at the beginning of your construction project in order to save on labor costs. The original purchase price was $36,000. The project ends in two (2) years which coincides with the end of the useful life of the skid-steer. The annual capital cost is $6,780 at i = 10%, in line with the original estimate when the skid-steer was purchased. A) Draw the Cash Flow Diagram B) What is the salvage value of the skid-steer at the end of its useful life?
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The price of a system of jockey pumps is P5,500,000. PLM decided to purchase this system and spent P215,500 for shipping and installation. The equipment will last for 10 years with a salvage value of 3% of its total cost. Determine the following: a. Yearly charge of depreciation using SL method. b. Depreciation charge on the 6 th year, and book value at the end of 8th year using SYD method.
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