Question

Analyze the following scenario: River County is planning several capital acquisitions for the coming year. These include the purchase of two new garbage trucks at $150,000 each, one new bulldozer at $240,000, three new riding lawn mowers at $16,000 each, and construction of an activity center in the part for $650,000. The expected lifetime of the various capital items is 10 years for the garbage trucks, 8 years for the bulldozer, 5 years for the lawn mowers, and 40 years for the activity center. Prepare a capital budget for the items to be acquired, showing their estimated lifetimes, and their per unit and total costs. Clearly label the calculations for the required components of the capital budget using Excel. Use formulas to show the interrelationships and format the cells to insert a comma if there is more than three numbers and round to the nearest whole number. Explain your budget to the county council. My question is how do I formulate the second part?

Answer 1

Capital Budget
Items to be Acquired (A)	Quantity (B)	Estimated Useful Life (C )	Cost (D)	Total cost (E=B*D)
Garbage Trucks	2	10 Years	$    1,50,000	$    3,00,000
Bulldozer	1	8 Years	$    2,40,000	$    2,40,000
Riding Lawns Mowers	3	5 Years	$       16,000	$       48,000
Construction of Activity Center	1	40 Years	$    6,50,000	$    6,50,000
Total Capital Expenditure Budget				$ 12,38,000
Capital Budget is a Budget which shows all the expenditure to be incurred by company in the Fixed Assets (Like Plant, Machinery, Building, land etc) to for the purpose of day to day operation in business. In the given case the Company is thinking to buy two garbage trucks, total cost $3,00,000 having useful life of 10 years, a Bulldozer costing $2,40,000 having a useful life of 1 year, 3 Riding Lawns Mowers total cost of $48,000 and also want to construct a Activity center which will cost $6,50,000. All such Capital expenditure will total cost to the Company $12,38,000.