2 PROBLEMS. I need to solve these in excel.Â
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An electric oil pump’s first cost is $45,000 and the interest rate is 10%. The pump’s end of year salvage values over the next 5 years are $42K, $40K, $38K, $32K, and $26K. Determine the pump’s economic life.  How do I solve this the answer is year 3, and 6615
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The Ajax Company purchased a railroad tank car 8 years ago for $60,000. It is being depreciated by SOYD depreciation, assuming a 10-year depreciable life and a $7,000 salvage value. The tank car needs to be reconditioned now at a cost of $35,000. If this is done, it is estimated the equipment will last for 10 more years and have a $10,000 salvage value at the end of the 10 years. Â
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On the other hand, the existing tank car could be sold now for $10,000 and a new tank purchased for $85,000. The new tank car would be depreciated by MACRS depreciation. It is estimated actual salvage value after 10 years would be $15,000. In addition, the new tank car would save $10,000 per year in maintenance costs, compared to the reconditioned car.
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Based on a 15% before-tax rate of return, determine whether the existing tank car should be reconditioned or a new one purchased. (Note: The problem statement provides more data than are needed, which is typical of real situations.)
Answers
Status NEW
Posted 22 Jun 2017 04:06 AM
My Price 6.00
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