ACCT 386 - Week 7 - Homework - Question 6

ACCT 386 - Week 7 - Homework - Question 6
Price: $4.99
This Tutorial contains following Attachments
  • ACCT 386 - Week 7 - Homework - Question 6.doc
Qty:     - OR -   Add to Wish List

ACCT 386 - Week 7 - Homework - Question 6

There may be chances that the figures given in our question and your question doesn't matches. Don't worry, we are here to help you. Just write to us at and your answer is with you in no time.


Question 6

Tiger Computers, Inc., of Singapore is considering the purchase of an automated etching machine for use in the production of its circuit boards. The machine would cost $800,000. (All currency amounts are in Singapore dollars.) An additional $560,000 would be required for installation costs and for software. Management believes that the automated machine would provide substantial annual reductions in costs, as shown below:


Annual Reduction
in Costs

  Labor costs



  Material costs



The new machine would require considerable maintenance work to keep it properly adjusted. The company’s engineers estimate that maintenance costs would increase by $5,010 per month if the machine were purchased. In addition, the machine would require a $97,000 overhaul at the end of the sixth year.

The new etching machine would be usable for 10 years, after which it would be sold for its scrap value of $404,000. It would replace an old etching machine that can be sold now for its scrap value of $67,000. Tiger Computers, Inc., requires a return of at least 15% on investments of this type. (Ignore income taxes.)

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.