Answered Questions /
(Solved): Kiddy Toy Corporation Needs To Acquire The Use Of A Machine To Be Used In Its Manufacturing Process....
Kiddy Toy Corporation needs to acquire the use of a machine to be used in its manufacturing process. The machine needed is manufactured by Lollie Corp. The machine can be used for 8 years and then sold for $23,000 at the end of its useful life. Lollie has presented Kiddy with the following options: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. Buy machine. The machine could be purchased for $173,000 in cash. All insurance costs, which approximate $18,000 per year, would be paid by Kiddy. 2. Lease machine. The machine could be leased for a 8-year period for an annual lease payment of $38,000 with the first payment due immediately. All insurance costs will be paid for by the Lollie Corp. and the machine will revert back to Lollie at the end of the 8- year period. Required: Assuming that a 9% interest rate properly reflects the time value of money in this situation and that all maintenance and insurance costs are paid at the end of each year, determine which option Kiddy should choose. Ignore income tax considerations. (Negative amounts should be indicated by a minus sign. Round your final answers to nearest whole dollar amount.) PV Buy option Lease option Kiddy should choose
During this challenging time when learning has shifted to online platforms.
We are determined to help you with online tutorial services and quick solutions to assist you in your academic work.
Our answers are of high quality from professionals and will give you insight to understand your class concepts effectively.
This time we are only requiring a subscription fee of $12 per month and you get access to professional answers available.
As the world recovers, ensure you maintain high level hygiene, keep a safe social distance and do not forget to help those in need in this challenging season.