Skeller is using an old machine in it's printing
operations..
The machine cost 420000 many years ago.
Accumulated depreciation on the machine is 200000.
Skeller is currently recording 22000 of
depreciation each year on the machine. The machine will likely last
10 more years but only if Skeller spends 30000 per
year on maintenance. In 10 years Skeller can likely sell the
machine for 1000. Today, the machine is worth
52000.
Skeller is considering buying a new machine to replace the old one.
The new machine will cost 680000. Skeller plans to
keep the machine 10 years. It can sell the new machine for
110000 at that point. Skeller will depreciate the
new machine using straight-line depreciation at the rate of
57000 per year.
([680000-110000]/10 =
57000)
The new machine would allow Skeller to expand services. Skeller
estimated they would increase their contribution margin by
25000 per year.
Ignoring taxes and time value of money- and based only on the
estimates above, compute the difference in costs over the next 10
years given the two alternatives.
Which alternative is preferable (has the lower total cost). Type
Keep or Replace
How much is the cost of the preferable alternative lower than the
other alternative? Enter as a positive number.
Skeller is using an old machine in it's printing operations.. The machine cost 420000 many years...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $597,100 and has $348,000 of accumulated depreciation to date, with a new machine that has a purchase price of $484,500. The old machine could be sold for $64,000. The annual variable production costs associated with the old machine are estimated to be $156,000 per year for eight years. The annual variable production costs for the new machine are estimated to be $100,100 per year for...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $600,200 and has $351,800 of accumulated depreciation to date, with a new machine that has a purchase price of $483,400. The old machine could be sold for $64,700. The annual variable production costs associated with the old machine are estimated to be $156,600 per year for eight years. The annual variable production costs for the new machine are estimated to be $102,400 per year for...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $599,300 and has $352,900 of accumulated depreciation to date, with a new machine that has a purchase price of $486,400. The old machine could be sold for $62,600. The annual variable production costs associated with the old machine are estimated to be $156,800 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,400 per year for...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $597,000 and has $352,200 of accumulated depreciation to date, with a new machine that has a purchase price of $486,300. The old machine could be sold for $61,300. The annual variable production costs associated with the old machine are estimated to be $155,700 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,000 per year for...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $600,800 and has $351,900 of accumulated depreciation to date, with a new machine that has a purchase price of $485,900. The old machine could be sold for $61,200. The annual variable production costs associated with the old machine are estimated to be $156,600 per year for eight years. The annual variable production costs for the new machine are estimated to be $101,300 per year for...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $597,700 and has $351,600 of accumulated depreciation to date, with a new machine that has a purchase price of $486,800. The old machine could be sold for $61,400. The annual variable production costs associated with the old machine are estimated to be $155,800 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,800 per year for...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $601,400 and has $352,300 of accumulated depreciation to date, with a new machine that has a purchase price of $483,200. The old machine could be sold for $61,300. The annual variable production costs associated with the old machine are estimated to be $158,500 per year for eight years. The annual variable production costs for the new machine are estimated to be $100,600 per year for...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $602,200 and has $347,000 of accumulated depreciation to date, with a new machine that has a purchase price of $486,200. The old machine could be sold for $61,400. The annual variable production costs associated with the old machine are estimated to be $156,200 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,600 per year for...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $600,900 and has $351,600 of accumulated depreciation to date, with a new machine that has a purchase price of $484,200. The old machine could be sold for $64,100. The annual variable production costs associated with the old machine are estimated to be $156,400 per year for eight years. The annual variable production costs for the new machine are estimated to be $100,100 per year for...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $602,200 and has $347,000 of accumulated depreciation to date, with a new machine that has a purchase price of $486,200. The old machine could be sold for $61,400. The annual variable production costs associated with the old machine are estimated to be $156,200 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,600 per year for...