Business, 15.04.2020 19:02 Adolfosbaby

Acme Inc. is evaluating a new project to produce rockets. The project will involve $200,000 to purchase a new machine.

Every year, Acme will need to spend $5,000 to keep the machine running and the revenue is $75,000 per year by selling the rockets.

Every 2 years, Acme will have to spend $1,000 to update the machine.

Acme Inc. expects that the machine will last for 10 years, and at the end of 10 years, Acme will be able to sell the machine for $50,000.

1. What is the annual operations and maintenance cost?

a. $5,000

b. $5,500

c. $6,000

d. $50,000

e. $35,000

2. What is the overhaul cost?

a. $500 every year

b. $1,000 every five years

c. $5,000 every five years

d. $2,500 every two years

e. $70,000 every ten years

3. What is the salvage value of the machine at the end of 10 years?

a. $45,000

b. $50,000

c. $150,000

d. $250,000

e. $945,000

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Acme Inc. is evaluating a new project to produce rockets. The project will involve $200,000 to purch...

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