Invoice price of New Machine = $129000
Estimated Freight Charges = $3200
Installation Costs = $5300
Total Cost of New Machine = $137500
Income Statement:
Sales (New Machine) = $1722500 {[10600+25%(10600)]×130}
Gross Profit (30%) = $516750 [1722500×30%]
- Annual Selling Expenses = ($187000) [170000+10%]
- Annual Admin Expenses = ($119000)
- Depreciation = ($34375) [$137500÷4yrs]
- Cash Back Period (3yrs) = ($11458) {[$137500÷3]-$34375}
Total Annual Return (Profit) = $164917
Annual Rate of Return on New Machine = ($164917÷$137500)×100
ARR = 119.93%
Expand Your Critical Thinking 25-01 a-d (Part Level Submission) Marigold Company is considering the purchase of...
Expand Your Critical Thinking 25-01 a-d (Part Level Submission) Marigold Company is considering the purchase of a new machine. Its invoice price is $129,000, freight charges are estimated to be $3,200, and installation costs are expected to be $5,300. Salvage value of the new machine is expected to be zero after a useful life of 4 years. Existing equipment could be retained and used for an additional 4 years if the new machine is not purchased. At that time, the...
Expand Your Critical Thinking 25-01 a-d (Part Level Submission) Marigold Company is considering the purchase of a new machine. Its invoice price is $129,000, freight charges are estimated to be $3,200, and installation costs are expected to be $5,300. Salvage value of the new machine is expected to be zero after a useful life of 4 years. Existing equipment could be retained and used for an additional 4 years if the new machine is not purchased. At that time, the...
Marigold Company is considering the purchase of a new machine. Its invoice price is $129,000, freight charges are estimated to be $3,200, and installation costs are expected to be $5,300. Salvage value of the new machine is expected to be zero after a useful life of 4 years. Existing equipment could be retained and used for an additional 4 years if the new machine is not purchased. At that time, the salvage value of the equipment would be zero. If...
Your answer is partially correct. Try again. Aurora Company is considering the purchase of a new machine. The invoice price of the machine is $162,000, freight charges are estimated to be $5,000, and installation costs are expected to be $7,000. Salvage value of the new equipment is expected to be zero after a useful life of 5 years. Existing equipment could be retained and used for an additional 5 years if the new machine is not purchased. At that time,...
Aurora Company is considering the purchase of a new machine. The invoice price of the machine is $140,000, freight charges are estimated to be $4,000, and installation costs are expected to be $6,000. Salvage value of the new equipment is expected to be zero after a useful life of 5years. Existing equipment could be retained and used for an additional 5 years if the new machine is not purchased. At that time, the salvage value of the equipment would be...
Hancock Company is trying to make a decision as to whether it should purchase of a new piece of equipment. The invoice price of the equipment is $140,000 with an estimate of $4,000 in freight charges and installation costs are expected to be $6,000. The Company expects that the salvage value of the new equipment will be zero after a useful life of 5 years. If the new machine is not purchased, the Company’s existing equipment could be retained and...
C7.61 Castle Company is considering the purchase of a new machine. The invoice price of the machine is $150,000, freight charges are estimated to be $6,000, and installation costs are expected to be $4,000. The salvage value of the new equipment is expected to be zero after a useful life of four years. The company could retain the existing equipment and use it for an additional four years if it doesn't purchase the new machine. At that time, the equipment's...
13. A company is considering purchasing a machine that costs $344000 and is estimated to have no salvage value at the end of its 8-year useful life. If the machine is purchased, annual revenues are expected to be $100000 and annual operating expenses exclusive of depreciation expense are expected to be $38000. The straight-line method of depreciation would be used. If the machine is purchased, the annual rate of return expected on this machine is 36.04%. 11.05%. 5.52%. 18.02%. 14....
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $120,000 with a 12-year life and no salvage value. It will be depreciated on a straight-ine basis. The company expects to sell 48,000 units of the equipment's product each year. The expected annual income related to this equipment follows. 75,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation on...
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equi pment is expected to cost $192,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 76,800 units of the equipment's product each year. The expected annual income related to this equipment follows. $120,000 Sales Costs Materials, labor, and overhead (except depreciation on new equipment) Depreciation...