Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. kiddy toy corporation needs to acquire the use of

Kiddy Toy Corporation needs to acquire the use of a machine to be used in...

90.2K

Verified Solution

Question

Accounting

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 Corporation. The machine can be used for 8 years and then sold for $29,000 at the end of its useful life. Lollie has presented Kiddy with the following options:
Buy machine. The machine could be purchased for $179,000 in cash. All maintenance costs, which approximate $24,000 per year, would be paid by Kiddy.
Lease machine. The machine could be leased for a 8-year period for an annual lease payment of $44,000 with the first payment due immediately. All maintenance costs will be paid for by the Lollie Corporation and the machine will revert back to Lollie at the end of the 8-year period.
Required:
Assuming that a 8% interest rate properly reflects the time value of money in this situation and that all maintenance costs are paid at the end of each year, determine which option Kiddy should choose. Ignore income tax considerations.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Which of the following is not an equation for the line passing through the points...

Calculus
Q

Journalize the following business transactions in generaljournal form. Identify each transaction by number. You...

Accounting
Q

V1 (Area 17 of the occipital lobe) is an example of a _______________. a. primary activation region b....

Medical Sciences
Q

A disk with outer radius ro = 150 mm and inner radius ri = 25...

Mechanical Engineering
Q

What is the best smart door lock for an office at a company? which one is...

Electrical Engineering
Q

Retlaw Corporation (RC) manufactures time series photographic equipment. It is currently at its target debt/equity ratio...

Finance
Q

Three identical mass M are placed at corner of 3 equilateral triangle of side L...

Physics
Q

Two small balls having equal positive charge Q each are suspended by two insulating strings...

Physics
Q

Sketch the region defined by the inequalities 3 r 5 and Choose the correct graph...

Geometry
Q

John Carlson Inc. uses a predetermined overhead rate based on direct labor hours to apply...

Accounting
Q

Comparing Three Depreciation Methods a residual value of $35,200. The equipment was used...

Accounting
Q

I would love some help with finding the below ratios for Nike in 2017 10-K...

Accounting