Last year (2013), Richter Condos installed a mechanized elevator for its tenants
ID: 2379455 • Letter: L
Question
Last year (2013), Richter Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the company Last year (2013), Richter Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the companyExplanation / Answer
Annual Dp of Old Elevator = 96050/5 = $19,210
Annul Dep New Eelvator = 159247/4 = $39,812
Book Value of Old Elevator = Cost - 1YrDep = 96050-19210 = $76,840
Sold for 25148
SO Loss on Sale = $76,840 - 25148 = $51,692 ...(C)
Net Income with Old elevator = Revenue - (Op Cost Fixed & Variable + S&A exp +Dep)
= 240010 - (34254+23836+28926+19210)
= $133,784 ............(D)
Net Income with new Elevator = 240010 - (9405+8820+28926+39812)
= $153,047............(E)
SO Increas in Net Income = D-E = $19,263 ....(F)
SO Net income for 4 yrs = 4*$19,263 = $77,052
Less Loss on Sale of Old elevator (C) 51692
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So Net Gain if Old elevator is replaced $25,360
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