The Queensland Land and Cattle Company (QL&CC) is one of the largest cattle-buye
ID: 2725853 • Letter: T
Question
The Queensland Land and Cattle Company (QL&CC) is one of the largest cattle-buyers in the country. It has buyers at all the major cattle auctions throughout eastern Australia who buy on the company’s behalf and then have cattle shipped to Longreach, Queensland, where they are shorted by weight and type before being shipped off to feed lots in Queensland. The company has been considering the replacement of its trucks with a newer, more fuel-efficient fleet for some time, and a local Peterbilt dealer has approached the company with a proposal. The proposal would call for the purchase of 10 new trucks at a cost of $100,000 each. Each new vehicle would be depreciated toward a salvage value of $40,000 over a period of five years. If QL&CC purchases the trucks, it will sell its existing fleet of 10 trucks to the Peterbilt dealer for their current book value of $25,000 per unit. The existing fleet will be fully depreciated in one more year but is expected to be serviceable for five more years, at which time the vehicles would be worth only $5,000 per unit as scrap.
Explanation / Answer
As seems from the question, that some information missing in the question. What is the requirement from the question? could not be understand.
Paossibility of question:
Whether replacement should be made or not. Information for compare net cost with and without replacement is not given.
Whether independent replacement requirement successful. Even in this case, complete information is not given,i.e., Discount factor, time period.
Therefor, what could be found from the given information is the initial cost that is found out from the given information.
Per Unit Total Cost of new Trucks 100,000 1,000,000 Less: Sell of existing trucks 25,000 250,000 Net Initial cost 75,000 750,000Related Questions
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