Homework Answers
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Relevant costs of keeping old machine = Annual operating costs of old machine * 4 = 105,000 * 4 = 420,000 Option B is the answer |
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Old Machine $670,000 Replacement Machine $540,000 Original cost Useful life in years Current age in years Book value Di...
Replacement Machine Old Machine Original cost $650,000 $520,000 Useful life in years 6 12 Current age...
Replacement Machine Old Machine Original cost $650,000 $520,000 Useful life in years 6 12 Current age in years 6 Book value $390,000 Disposal value now $112,000 $0 $0 Disposal value in 6 years Annual cash operating costs $103,000 $64,000 The difference between keeping the old machine and replacing the old machine is O A. $910,000 in favor of replacing the old machine O B. $174,000 in favor of replacing the old machine c. $910,000 in favor of keeping the old...
Planet Design Services, Inc., is considering replacing a machine. The following data are available: Old Machine...
Planet Design Services, Inc., is considering replacing a machine. The following data are available: Old Machine Replacement Machine Original cost $670,000 $490,000 Useful life in years 8 4 Current age in years 4 0 Book value $350,000 - Disposal value now $ 162 comma 000$162,000 - Disposal value in 44 years $0 $0 Annual cash operating costs $108,000 $57,000 The difference between keeping the old machine and replacing the old machine is ________. A.$840,000 in favor of replacing the old...
6. Award: 8.00 points A machine purchased three years ago for $305,000 has a current book...
6. Award: 8.00 points A machine purchased three years ago for $305,000 has a current book value using straight-line depreciation of $182,000; its operating expenses are $39,000 per year. A replacement machine would cost $229,000, have a useful life of nine years, and would require $12,000 per year in operating expenses. It has an expected salvage value of $65,000 after nine years. The current disposal value of the old machine is $77,000; if it is kept 9 more years, its...
A machine purchased three years ago for $300,000 has a current book value using straight-line depreciation...
A machine purchased three years ago for $300,000 has a current book value using straight-line depreciation of $177,000; its operating expenses are $31,000 per year. A replacement machine would cost $238,000, have a useful life of eleven years, and would require $13,000 per year in operating expenses. It has an expected salvage value of $67,000 after eleven years. The current disposal value of the old machine is $80,000; if it is kept 11 more years, its residual value would be...
managerial accounting Example Old New $390,000 Purchase Price Book value Current disposal value Salvage value Useful...
managerial accounting
Example Old New $390,000 Purchase Price Book value Current disposal value Salvage value Useful Life Depreciation Working capital $ 40,000 $ 6,500 S 0 5 years $ 8,000 $ 6,000 % 0 5 years $ 78,000 $15,000 Income tax rate -40% Required Rate of Return = 8% Before-tax operational cash savings: $120,000 in year 1 through 4 $105,000 in year 5 1. Initial Cash Flows Price of new machine $390,000 After-tax Cash Flow from Current Disposal of Old...
Bryant Company has a factory machine with a book value of $85,700 and a remaining useful life of 5 years. It can be sold...
Bryant Company has a factory machine with a book value of $85,700 and a remaining useful life of 5 years. It can be sold for $26,500. A new machine is available at a cost of $468,800. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $647,500 to $550,000. Prepare an analysis showing whether the old machine should be retained or replaced. (In the first two columns, enter...
r its Arizona facility. The machine costs $158,000 and is expected to have a useful life of 9 years, with a terminal di...
r its Arizona facility. The machine costs $158,000 and is expected to have a useful life of 9 years, with a terminal disposal value of $3,000. Savings in cash operating costs are expected to be $37,500 per year. However, additional working capital is needed to keep the machine running efficiently. The working capital must continually be replaced, so an investment of Lab's required rate of return is 12%. Ignore income taxes in your analysis. Dunkin Lab plans to purchase a...
18 - Riener Hospital has an x-ray machine with a book value of $60,000 and a remaining useful life of three years. At th...
18 - Riener Hospital has an x-ray machine with a book value of $60,000 and a remaining useful life of three years. At the end of the three years the equipment will have a zero salvage value. The market value of the equipment is currently $32,000. Riener can purchase a new machine for $145,000 and receive $28,000 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $27,000 per year over the three-year...
A three-year-old machine has a cost of $50,000, an estimated residual value of $5,000, and an estimated useful life of five years. The company uses straight-line depreciation. Calculate the net book value at the end of the third year.
a.A three-year-old machine has a cost of $50,000, an estimated residual value of $5,000, and an estimated useful life of five years. The company uses straight-line depreciation.Calculate the net book value at the end of the third year.b.A three-year-old machine has a cost of $37,600, an estimated residual value of $2,600, and an estimated useful life of 35,000 machine hours. The company uses units-of-production depreciation and ran the machine 5,200 hours in year 1; 6,150 hours in year 2; and...
A new machine costs $25,000 and has the estimated maximum (physical) life of 5 years. It...
A new machine costs $25,000 and has the estimated maximum
(physical) life of 5 years. It also has the estimated salvage
(market) value (S) and operating and maintenance costs (O&M) in
each of the 5 years of use as shown below: Year n Sn O&Mn EACn
0 $25,000 1 $16,000 $5,000 $16,000 2 $13,000 $8,000 $14,212 3
$11,000 $11,000 $14,159 4 $10,000 $14,000 $14,541 5 $9,500 $17,000
$15,181 MCn $16,000 $12,280 $14,040 $15,880 $18,300 Suppose the
MARR is 8%. The...
Replacement Machine Old Machine Original cost $650,000 $520,000 Useful life in years 6 12 Current age in years 6 Book value $390,000 Disposal value now $112,000 $0 $0 Disposal value in 6 years Annual cash operating costs $103,000 $64,000 The difference between keeping the old machine and replacing the old machine is O A. $910,000 in favor of replacing the old machine O B. $174,000 in favor of replacing the old machine c. $910,000 in favor of keeping the old...
6. Award: 8.00 points A machine purchased three years ago for $305,000 has a current book value using straight-line depreciation of $182,000; its operating expenses are $39,000 per year. A replacement machine would cost $229,000, have a useful life of nine years, and would require $12,000 per year in operating expenses. It has an expected salvage value of $65,000 after nine years. The current disposal value of the old machine is $77,000; if it is kept 9 more years, its...
managerial accounting
Example Old New $390,000 Purchase Price Book value Current disposal value Salvage value Useful Life Depreciation Working capital $ 40,000 $ 6,500 S 0 5 years $ 8,000 $ 6,000 % 0 5 years $ 78,000 $15,000 Income tax rate -40% Required Rate of Return = 8% Before-tax operational cash savings: $120,000 in year 1 through 4 $105,000 in year 5 1. Initial Cash Flows Price of new machine $390,000 After-tax Cash Flow from Current Disposal of Old...
r its Arizona facility. The machine costs $158,000 and is expected to have a useful life of 9 years, with a terminal disposal value of $3,000. Savings in cash operating costs are expected to be $37,500 per year. However, additional working capital is needed to keep the machine running efficiently. The working capital must continually be replaced, so an investment of Lab's required rate of return is 12%. Ignore income taxes in your analysis. Dunkin Lab plans to purchase a...
A new machine costs $25,000 and has the estimated maximum
(physical) life of 5 years. It also has the estimated salvage
(market) value (S) and operating and maintenance costs (O&M) in
each of the 5 years of use as shown below: Year n Sn O&Mn EACn
0 $25,000 1 $16,000 $5,000 $16,000 2 $13,000 $8,000 $14,212 3
$11,000 $11,000 $14,159 4 $10,000 $14,000 $14,541 5 $9,500 $17,000
$15,181 MCn $16,000 $12,280 $14,040 $15,880 $18,300 Suppose the
MARR is 8%. The...
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