Finance

(Break-even analysis) Acquiring more energy-efficient equipment would cost $80,000 now and yield savings of $20,000 in energy costs every year for the next 8 years, after which its salvage value will be 0. The discount rate is 8%.

(1) Based on a before-tax analysis, what is the economic break-even point for the yearly savings?

(2) You now realize that you forgot to consider something in part (1.1). If you acquire new energy-efficient equipment, you can dispose of some of your old equipment for a salvage value of $12,000. Taking this into consideration, redo part (1).

  1. 👍
  2. 👎
  3. 👁

Respond to this Question

First Name

Your Response

Similar Questions

  1. Engineering Economy

    Maintenance cost of an equipment is P20,000 for 2 years, P40,000 at the end of 4 years, and P80,000 at the end of 8 years. Compute the semi-annual amount that will be set aside for this equipment. Money worth 10% compounded

  2. accounting

    Jackson Company invests in a new piece of equipment costing $40,000. The equipment is expected to yield the following amounts per year for the equipment's four-year useful life: Cash revenues $ 60,000 Cash expenses (32,000)

  3. finance (firm's net income)

    If a firm has a break-even point of 20,000 units and the contribution margin on the sirm's single product is $3.00 per unit and fixed costs are $60,000, what will the firm's net income be at sales of 30,000 units? o.k. the break

  4. Finance

    What's the net present value (NPV) of this replacement project? The old equipment has a book value of $200,000 (year 0) and a current salvage value of $300,000 (year 0). It is being depreciated on a straight-line basis. It has

  1. Accounting

    O' Hara Company began operations on December 1, 2011. Presented below is selected information related to O' Hara Company at December 31, 2011. Office Equipment ₤ 40,000; Utilities Expense ₤ 6,000; Cash 14,000; Accounts

  2. Finance

    Your company is considering a replacement of an old delivery van with a new one that is more efficient. The old van cost $30,000 when it was purchased 5 years ago. The old van is being depreciated using the simplified straight

  3. MTH 156

    Southwest Cleaners believes that it will need new equipment in 10 years. The equipment will cost $26,000. What lump sum should be invested today at 8% compounded semi-annually, to yield $26,000?

  4. finance (net income)

    If a firm has a break-even point of 20,000 units and the contribution margin on the firm's single product is $3.00 per unit and fixed costs are $60,000, what will the firm's net income be at sales of 30,000 units? A. $90,000 B.

  1. Trial Balance

    Given the following balances, the total debits in the trial balance would equal: Equipment $ 37,000 Accounts Payable 2,000 Sales 49,000 Accumulated Depreciation 4,000 Accounts Receivable 7,000 Retained Earnings 16,000 Salary

  2. Science

    1). Assume the following: -the house has 2,000 square feet -80,000 BTU's of heat per sq. foot are required to heat the house for winter. -Natural gas is available at a cost of $5.00 per thousand cubic feet. -One cubic foot of

  3. physics

    An energy-efficient lightbulb, taking in 25.0 W of power, can produce the same level of brightness as a conventional bulb operating at power 100 W. The lifetime of the energy-efficient bulb is 10,000 h and its purchase price is

  4. Accounting

    Your company is considering a replacement of an old delivery van with a new one that is more efficient. The old van cost $30,000 when it was purchased 5 years ago. The old van is being depreciated using the simplified straight

You can view more similar questions or ask a new question.