Morrel University has a small shuttle bus that is in poor mechanical condition. The bus can be either overhauled now or replaced with a new shuttle bus. The following data have been gathered concerning these two alternatives (Ignore income taxes.): Multiple Choice Purchase cost new Remaining net book value Major repair needed now Annual cash operating costs Salvage value now Trade-in value in seven years Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The University could continue to use the present bus for the next seven years. Whether the present bus is used or a new bus is purchased, the bus would be traded in for another bus at the end of seven years. The University uses a discount rate of 12% and the total cost approach to net present value analysis. If the new bus is purchased, the present value of the annual cash operating costs associated with this alternative O $(42,800) $(36,500) $(54,800) Present Bus $ 32,000 $ 21,000 $ 9,000 $ 12,000 $ 10,000 $ 2,000 $(16,200) New Bus $ 40,000 0 0 $ 8,000 0 $5,000 closest to:

Morrel University has a small shuttle bus that is in poor mechanical condition. The bus can be either overhauled now or replaced with a new shuttle bus. The following data have been gathered concerning these two alternatives (Ignore income taxes.): Multiple Choice Purchase cost new Remaining net book value Major repair needed now Annual cash operating costs Salvage value now Trade-in value in seven years Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The University could continue to use the present bus for the next seven years. Whether the present bus is used or a new bus is purchased, the bus would be traded in for another bus at the end of seven years. The University uses a discount rate of 12% and the total cost approach to net present value analysis. If the new bus is purchased, the present value of the annual cash operating costs associated with this alternative O $(42,800) $(36,500) $(54,800) Present Bus $ 32,000 $ 21,000 $ 9,000 $ 12,000 $ 10,000 $ 2,000 $(16,200) New Bus $ 40,000 0 0 $ 8,000 0 $5,000 closest to:

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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