Question

company owns a 6-year old gear hobber that has a book value of $60,000. The present market value of the hobber is $80,000. A new gear hobber can be purchased for $450,000. Using an outsider’s point of view, what is the net fi rst cost of purchasing the new gear hobber?

Answer 1

$370,000

Step-by-step explanation:

Net Cost of the purchasing the new gear will be as follows

Total cost of new gear hob = $450000

less:sale value of old hobber at present market value $80000

Net first cost =$450000-$80000

= $370000