Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be eitheroverhauled or replaced with a new truck. The company has assembled the following information:Purchase cost newRemaining book valueOverhaul needed nowAnnual cash operating costsSalvage value-nowSalvage value-five years from nowPresentTruck$ 25,000$ 12,000NewTruck$ 31,000$ 8,000$ 13,000 $ 10,500$ 6,000$5,000$ 6,000If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck ispurchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated,resulting in a substantial reduction in annual operating costs, as shown above.The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 14% discount rate.Click here to view Exhibit 78-1 and Exhibit 78-2. to determine the appropriate discount factor(s) using tables.Required:1. What is the net present value of the "keep the old truck" alternative?2. What is the net present value of the "purchase the new truck" alternative?3. Should Bilboa Freightlines keep the old truck or purchase the new one?Net present valueComplete this question by entering your answers in the tabs below.Required 1 Required 2 Required 3What is the net present value of the "keep the old truck" alternative? (Enter negative amount with a minus sign. Round yourfinal answer to the nearest whole dollar amount.)Required 1Required 2 >

Net Present ValueNet present value (NPV) is a financial metric that represents the difference…

Required: 1. What is the net present value of the "keep the old truck" alternative? 2. What is the net present value of the "purchase the new truck" alternative? 3. Should Bilboa Freightlines keep the old truck or purchase the new one?

Required: 1. What is the net present value of the "keep the old truck" alternative? 2. What is the net present value of the "purchase the new truck" alternative? 3. Should Bilboa Freightlines keep the old truck or purchase the new one?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 9EB: Ronson recently purchased a new boat to help ship product overseas. The following information is...

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Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value-now Salvage value-five years from now Present Truck $ 30,000 $ 17,000 $ 16,000 $ 15,500 Required 1 New Truck $ 39,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 9% discount rate. Click here to view Exhibit 7B-1 and Exhibit 7B-2, to determine the appropriate…
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Present TEuck $ 27,000 $ 14,000 $ 13,000 $ 14,000 $ 9,000 $ 5,000 New Truck Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value-now Salvage value-five years from now $ 36,000 $ 11,500 $ 8,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above. ces The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 13% discount rate. Click here to view Exhibit 148-1 and Exhibit 148-2, to…
ok at ances Bilboa Freightlines, S.A. of Panama has a small truck that it uses for local deliveries. The truck is in bad repair and must be either overhauled or replaced with a new truck. The company has assembled the following information (Panama uses the U.S. dollar as its currency): Purchase cost new Remaining book value Overhaul needed now i Annual cash operating costs Salvage value now Salvage value eight years from now Present Truck $ 34,000 19,000 7,000 Purchase the new truck Keep the old truck 10,000 12,000 2,000 Present Value of Net Cash Flows New Truck $46,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for eight more years. If a new truck is purchased, it will be used for eight years, after which it will be traded in on another truck. The new truck would be diesel-fuelled. resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment…
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Present Truck New Truck Purchase cost new $ 30,000 $ 39,000 Remaining book value $ 17,000 - Overhaul needed now $ 16,000 - Annual cash operating costs $ 15,500 $ 14,000 Salvage value-now $ 9,000 - Salvage value-five years from now $ 8,000 $ 10,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 9% discount rate. Click here to view…
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value-now Salvage value-five years from now If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 7% discount rate. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Present Truck $ 31,000 $ 24,000 $ 23,000 $…
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: Present Truck New Truck Purchase cost new $ 30,000 $ 39,000 Remaining book value $ 17,000 - Overhaul needed now $ 16,000 - Annual cash operating costs $ 15,500 $ 14,000 Salvage value-now $ 9,000 - Salvage value-five years from now $ 8,000 $ 10,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 9% discount rate. Click here to view…
Santa Rosa recently purchased a new boat to help ship product overseas. The following information is related to that purchase: Purchase price $4,100,000 Cost to bring boat to production facility $29,000 Yearly insurance cost $29,000 Annual maintenance cost of $40,000 Received 6% discount on sales price A. Determine the acquisition cost of the boat. $? B. Record the journal entry needed. If an amount box does not require an entry, leave it blank.
Bilboa Freightlines, S.A., of Panama, has a small truck that it uses for intracity deliveries. The truck is worn out and must be either overhauled or replaced with a new truck. The company has assembled the following information: PresentTruck NewTruck Purchase cost new $ 23,000 $ 29,000 Remaining book value $ 11,000 - Overhaul needed now $ 10,000 - Annual cash operating costs $ 12,000 $ 8,500 Salvage value-now $ 6,000 - Salvage value-five years from now $ 5,000 $ 5,000 If the company keeps and overhauls its present delivery truck, then the truck will be usable for five more years. If a new truck is purchased, it will be used for five years, after which it will be traded in on another truck. The new truck would be diesel-operated, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis. All investment projects are evaluated using a 12%…
es Bilboa Freightlines, S.A. of Panama has a small truck that it uses for local deliveries. The truck is in bad repair and must be either overhauled or replaced with a new truck. The company has assembled the following information (Panama uses the U.S. dollar as its currency): Purchase cost new Remaining book value Overhaul needed now Annual cash operating costs Salvage value now Salvage value eight years from now Present Truck $37,000 $50,500 New Truck 22,000 Purchase the new truck Keep the old truck 8,500 13,000 8,500 13,500 2,600 If the company keeps and overhauls its present delivery truck, then the truck will be usable for eight more years. If a new truck is purchased, it will be used for eight years, after which it will be traded in on another truck. The new truck would be diesel-fuelled, resulting in a substantial reduction in annual operating costs, as shown above. The company computes depreciation on a straight-line basis.. investment projects are evaluated using a 16%…
Santa Rosa recently purchased a new boat to help ship product overseas. The following information is related to that purchase: Purchase price $4,500,000 Cost to bring boat to production facility $25,000 Yearly insurance cost $25,000 Annual maintenance cost of $30,000 Received 8% discount on sales price Determine the acquisition cost of the boat, and record the journal entry needed.
Santa Rosa recently purchased a new boat to help ship product overseas. The following information is related to that purchase: • Purchase price $4,500,000 • Cost to bring boat to production facility $25,000 • Yearly insurance cost $25,000 Annual maintenance cost of $37,000 • Received 8% discount on sales price A. Determine the acquisition cost of the boat. B. Record the journal entry needed. If an amount box does not require an entry, leave it blank. 10
Speed-ee Delivery is purchasing a new truck for its fleet. It pays the following costs at the time of the purchase. Cost Amount Purchase Price $ 60,000 Title Fees 1,800 Sales Tax 4,200 Insurance for the 1st year 3,000 What is the amount that Speed-ee Delivery will record as an Equipment asset for the purchase of the truck?