MKM International is seeking to purchase a new CNC machine in order to reduce costs. Two...
MKM International is seeking to purchase a new CNC machine in order to reduce costs. Two alternative machines are in consideration Machine 1 costs $500,000 but yields a 10 percent savings (net benefit) over the current machine used. Machine 2 costs $900,000 but yields a 20 percent savings (net benefit) over the current machine used. In order to meet demand, the following forecasted cost information for the current machine is also provided. Year 1 2 3 4 5 Projected Cost...
MKM International is seeking to purchase a new CNC machine in order to reduce costs. Two alternative machines are in consideration. Machine 1 costs $550,000, but yields a 15 percent savings over the current machine used. Machine 2 costs $850,000, but yields a 25 percent savings over the current machine used. In order to meet demand, the following forecasted cost information for the current machine is also provided. Year 1 2 3 4 Project Cost 1,000,000 1,350,000 1,450,000 1,500,000 2,400,000...
HT Tool Company HT Tool Co is considering the purchase of a new CNC milling machine to enhance the quality of its custom fabrication services. This project is not expected to change sales, but should save the firm in labor costs. The annual labor savings is expected to be $74,350 (before tax) but the machine will use more electrical power, which is expect to cost $2,400 each year. The machine costs $145,000. It will require $21,000 in modifications to support...
A firm is considering an investment in a new machine with a price of $18.12 million to replace its existing machine. The current machine has a book value of $6.12 million and a market value of $4.62 million. The new machine is expected to have a four-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.82 million in...
Mars Inc. is considering the purchase of a new machine that costs $60,000. This machine will reduce manufacturing costs by $5,000 annually. Mars will use the MACRS accelerated method (shown below) to depreciate the machine, and it expects to sell the machine at the end of its 5-year life for $10,000. The firm expects to be able to reduce net operating working capital by $15,000 when the machine is installed, but the net working capital will return to the original...
A firm is considering an investment in a new machine with a price of $18.15 million to replace its existing machine. The current machine has a book value of $6.15 million and a market value of $4.65 million. The new machine is expected to have a four-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.85 million in...
A firm is considering an investment in a new machine with a price of $16.4 million to replace its existing machine. The current machine has a book value of $6.1 million and a market value of $4.8 million. The new machine is expected to have a 4-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.65 million in...
A firm is considering an investment in a new machine with a price of $15.7 million to replace its existing machine. The current machine has a book value of $5.5 million and a market value of $4.2 million. The new machine is expected to have a 4-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.35 million in...
The Chang Company is considering the purchase of a new machine to replace an obsolete one. The current machine has a useful life of 8 years and a depreciation of $3000 per year. The proposed machine costs $40000 and will last for 8 years. The $40000 will be 100% depreciated over a straight line basis for 8 years. The new machine is expected to perform more efficiently and will produce a before tax cost savings of 9000 a year. The...
A firm is considering an investment in a new machine with a price of $18 million to replace its existing machine. The current machine has a book value of $6 million and a market value of $4.5 million. The new machine is expected to have a four-year life, and the old machine has four years left in which it can be used. If the firm replaces the old machine with the new machine, it expects to save $6.7 million in...