Ruman construction Limited has obtained a new truck with a list price, including options of Rs. 3150,000. The dealer had given a generous trade in allowance of Rs. 750,000 on its old truck that had a whole sale price of Rs. 450,000. Sales tax was Rs. 189,000. The annual cash operating costs of old truck was Rs. 630,000. The new truck was expected to reduce these costs by 1/3rd to 420,000 per year. The amount of original investment in the new truck is
The original investment in the new truck can be calculated as follows:
List price of the new truck: Rs. 3,150,000
Trade-in allowance for the old truck: Rs. 750,000
Net cost of the new truck: Rs. 3,150,000 - Rs. 750,000 = Rs. 2,400,000
Therefore, the original investment in the new truck is Rs. 2,400,000.
To calculate the amount of the original investment in the new truck, we need to subtract the trade-in allowance and sales tax from the list price of the new truck.
1. List price of the new truck: Rs. 3,150,000
2. Trade-in allowance for the old truck: Rs. 750,000
3. Sales tax: Rs. 189,000
Subtracting the trade-in allowance and sales tax:
Original investment = List price - Trade-in allowance - Sales tax
Original investment = Rs. 3,150,000 - Rs. 750,000 - Rs. 189,000
Original investment = Rs. 2,211,000
Therefore, the amount of the original investment in the new truck is Rs. 2,211,000.
To determine the amount of the original investment in the new truck, we'll need to consider the list price of the truck, the trade-in allowance for the old truck, and the sales tax.
1. Start with the list price of the new truck: Rs. 3,150,000.
2. Subtract the trade-in allowance for the old truck: Rs. 750,000.
- This means that Ruman Construction Limited received a credit of Rs. 750,000 towards the purchase of the new truck by trading in their old truck.
3. Subtract the sales tax from the adjusted price: Rs. 3,150,000 - Rs. 750,000 = Rs. 2,400,000.
- This is the amount after accounting for the trade-in allowance.
4. Add the sales tax: Rs. 2,400,000 + Rs. 189,000 = Rs. 2,589,000.
- This gives you the total amount paid for the new truck after considering the sales tax.
Therefore, the amount of the original investment in the new truck is Rs. 2,589,000.