Egress or Risk & Capital Value of the Warehouse Accounting Assignment Help

Assignment Task

Question 
A single level warehouse building has a 5000 m2 floor area for storage and a two level office attached to one end of the warehouse.

The main areas and the activities carried out in the building include:
• Storage handling (storage)
• Office works (office)
For questions in this assignment you are required to consider the warehouse only. The capital value of the warehouse as a shell is $3,000,000. The fit out and equipment are valued at $1,500,000. Loss due to warehouse shut down is $15,000 per day. The estimated life span of the building is 30 years. A fire safety systems engineer has come up with the following options for fire protection: 
 

System 1 - Sprinklers only

• Cost of installing sprinklers: $50,000.
• Maintenance cost: $4,000 per year
• Update in every 20 years for $60,000.

System 2 - Smoke detectors only

• Cost of installing smoke detectors: $10,000.
• Maintenance cost: $1,000 per year
• Update in every 20 years for $12,000.
• It is assumed that a sprinkler controlled fire would limit the damage and the business could be re-opened within 35 days. However, in the case of an uncontrolled fire (sprinkler failure or no sprinkler at all) the damage would extend to the whole building and it would require 150 days to restore the warehouse function.
• The discount rate is 10% per year.
• The frequency of fire starts in a warehouse building is assumed to be 1×10-6/sq-m/year. The reliability of the sprinkler system is assumed to be 0.90. List any other assumptions (if necessary) for data adopted in your calculation.

Required:
1. Analyse the costs and benefits of each of the two systems. Also, identify the more economically viable system. 
2. Repeat 1. when the life span of the building is 50 years instead of 30 years. Comment on the change. 

This Accounting Assignment has been solved by our Accounting Experts at onlineassignmentbank. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.
    
Be it a used or new solution, the quality of the work submitted by our assignment Experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.