Question

(CO 6) Sunrise is a voluntary, nonprofit, continuing care center. Presently, it has $1,000,000 set aside for replacement of the equipment. Its current accumulated depreciation is $1,500,000, and the average age of the equipment is 5 years. If it can be assumed that capital assets for Sunrise are inflating at 5% per year, what balance would Sunrise need to have set aside today to meet their replacement needs if they will not be using any debt financing?

1.) $1,276,200

2.) $5,000,000

3.) $1,276,282

4.) $7,500,000

Answer 1

Pg No-0 Solution :- Given cita : • Sunrise is a voluntary Non psotit, Countrting Care Conitor Prescilly it has $1000,000 • Current Acumula te d depreciation is $1500,000. The average age of the Equipment = 5 years. .. Capital Assets for Sunrise . . Tatlating at 54% per year. - The Accumulated depreciation is $1,500,000 with avg age of 5years So per year ang depreciation is = $300,000 The Capital cost would also Inflate at 5% the Total Requirement would be: >> 300,000+ (1-05+1.052 +1.053 + 1.094 +1.05) . → 1940573.84. .

Pg No - ③ So. Additional Capital Fund Requirmout:- → 1740573.84 – 1000000 → $740573. 84 , Approximately $1500000 öption u is Corvet: