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A machine cost rs.10000. annual operating cost is rs.400 for the first year and than increase by rs.800 every year. After how many years should the machine be replaced.?
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A machine cost rs.10000. annual operating cost is rs.400 for the first...
Calculation of Total Cost
- First Year Operating Cost = Rs. 400
- Second Year Operating Cost = Rs. 1200 (Rs. 400 + Rs. 800)
- Third Year Operating Cost = Rs. 2000 (Rs. 400 + Rs. 800 + Rs. 800)
- Fourth Year Operating Cost = Rs. 2800 (Rs. 400 + Rs. 800 + Rs. 800 + Rs. 800)
- Fifth Year Operating Cost = Rs. 3600 (Rs. 400 + Rs. 800 + Rs. 800 + Rs. 800 + Rs. 800)
Calculation of Salvage Value
- Assuming the machine has a useful life of 5 years, the salvage value can be calculated as follows:
- Salvage Value = Cost of Machine - Total Operating Cost Over 5 Years
- Salvage Value = Rs. 10000 - (Rs. 400 + Rs. 1200 + Rs. 2000 + Rs. 2800 + Rs. 3600)
- Salvage Value = Rs. 2000
Decision to Replace Machine
- If the salvage value is greater than the cost of replacement, the machine should be replaced.
- Assuming the cost of a new machine is Rs. 15000, the salvage value of the old machine is greater than the cost of replacement.
- Therefore, the old machine should not be replaced until the end of its useful life, which is 5 years.
Conclusion
- The machine should not be replaced until the end of its useful life, which is 5 years.
- After 5 years, the salvage value of the machine will be Rs. 2000, which is greater than the cost of replacement.
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A machine cost rs.10000. annual operating cost is rs.400 for the first...
Rate of depreciation????
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A machine cost rs.10000. annual operating cost is rs.400 for the first year and than increase by rs.800 every year. After how many years should the machine be replaced.?
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A machine cost rs.10000. annual operating cost is rs.400 for the first year and than increase by rs.800 every year. After how many years should the machine be replaced.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about A machine cost rs.10000. annual operating cost is rs.400 for the first year and than increase by rs.800 every year. After how many years should the machine be replaced.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine cost rs.10000. annual operating cost is rs.400 for the first year and than increase by rs.800 every year. After how many years should the machine be replaced.?.
A machine cost rs.10000. annual operating cost is rs.400 for the first year and than increase by rs.800 every year. After how many years should the machine be replaced.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about A machine cost rs.10000. annual operating cost is rs.400 for the first year and than increase by rs.800 every year. After how many years should the machine be replaced.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A machine cost rs.10000. annual operating cost is rs.400 for the first year and than increase by rs.800 every year. After how many years should the machine be replaced.?.
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