1 | |
Cost of machine | 120000 |
Divide by useful life | 10 |
Depreciation expense | 12000 |
2 | |
Operating cost of old machine | 30000 |
Less: Operating cost of new machine | 12000 |
Less: Annual depreciation on the new machine | 12000 |
Annual incremental net operating income | 6000 |
3 | |
Cost of the new machine | 120000 |
Less: Salvage value of old machine | 40000 |
Amount of the Initial investment | 80000 |
4 | |
Annual incremental net operating income | 6000 |
Divide by Initial investment | 80000 |
Simple rate of return | 7.50% |
EXERCISE 12-6 Simple Rate of Return Method L012-60 The management of Ballard MicroBrew is considering the...
Exercise 12-6 Simple Rate of Return Method [LO12-6] The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $59,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $7,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $25,000. The new machine would have a useful life of 10 years with no salvage...
Exercise 13-6 Simple Rate of Return Method (LO13-6) The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $57,000. The machine would replace an old piece of equipment that costs $15,000 per year to operate. The new machine would cost $7,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $24,000. The new machine would have a useful life of 10...
Exercise 13-6 Simple Rate of Return Method [LO13-6] The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $74,000. The machine would replace an old piece of equipment that costs $19,000 per year to operate. The new machine would cost $9,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $31,000. The new machine would have a useful life of 10...
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $47,000. The machine would replace an old piece of equipment that costs $13,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $22,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation...
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $55,000. The machine would replace an old piece of equipment that costs $14,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $21,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation...
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $54,000. The machine would replace an old piece of equipment that costs $14,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation...
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $120,000. The machine would replace an old piece of equipment that costs $30,000 per year to operate. The new machine would cost $12,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $40,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What...
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $50,000. The machine would replace an old piece of equipment that costs $13,000 per year to operate. The new machine would cost $6,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $20,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation...
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $74,000. The machine would replace an old piece of equipment that costs $19,000 per year to operate. The new machine would cost $9,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $31,000. The new machine would have a useful life of 10 years with no salvage value Required: 1. What...
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $67,000. The machine would replace an old piece of equipment that costs $18,000 per year to operate. The new machine would cost $8,000 per year to operate. The old machine currently in use could be sold now for a salvage value of $29,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation...