New machine cost | 31320 | |
Add: Installation costs | 1500 | |
Less: Salvage value of old machine | -2300 | |
Net investment cost | 30520 | |
a | ||
Net investment cost | 30520 | |
Divide by Net annual cash flows | 7000 | |
Cash payback period | 4.36 | years |
b | ||
Net investment cost | 30520 | |
Divide by Net annual cash flows | 7000 | |
PV factor for Internal rate of return | 4.36000 | |
The PV factor 4.36 for 6 years is closest to 10% | ||
Internal rate of return = 10% | ||
c | ||
Internal rate of return exceeds 9% | ||
The investment should be accepted. |
BSU Inc. wants to purchase a new machine for $31,320, excluding $1,500 of installation costs. The...
BSU Inc. wants to purchase a new machine for $41,010, excluding $1,500 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,100, and BSU Inc. expects to sell it for that amount. The new machine would decrease operating costs by $9,000 each year of its economic life. The straight-line depreciation method would be used for the new...
BSU Inc. wants to purchase a new machine for $44,055, excluding $1,500 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,400, and BSU Inc. expects to sell it for that amount. The new machine would decrease operating costs by $10,500 each year of its economic life. The straight-line depreciation method would be used for the new...
< Prev --/2 Question 4 View Policies Current Attempt in Progress BSU Inc. wants to purchase a new machine for $25,880, excluding $1,200 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $1,700, and BSU Inc. expects to sell it for that amount. The new machine would decrease operating costs by $6,000 each year of its economic...
work included pls! Bonita Inc. wants to purchase a new machine for $44.400, excluding $1,200 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,000, and Bonita Inc. expects to sell it for that amount. The new machine would decrease operating costs by $10,000 each year of its economic life. The straight-line depreciation method would be used...
55%- 10:57 PM Sat May 18 Practice Gradebook ORION Downloadable eTextbook PRINTER VERSION BACK CES Exercise 25-06 (Video) Vaughn Inc, wants to purchase a new machine for $45,800, excluding $1,500 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,400, and Vaughn Inc. expects to sell it for that amount. The new machine would decrease operating costs...
DI V A DICK etermine the cash payback period. (Round cash paybac decimal places, e.g. 10.53 Cash payback period 75 Determine the approximate internal rate of retum, (Round answer to provided.) decimal places, c.9. 13%. For calculation purposes, use 5 decimal places as displayed in the factor table Internal rate of return (c) Assuming the company has a required rate of return of 8%, determine whether the new machine should be purchased The investment should not be ccepted Click if...
Magna Inc. is considering modernizing its production facility by investing in new equipment and selling the old equipment. The following information has been collected on this investment. Old Equipment New Equipment Cost $80,480 Cost $38,480 Accumulated depreciation $40,700 Estimated useful life 8 years Remaining life 8 years Salvage value in 8 years $4,800 Current salvage value $10,400 Annual cash operating costs $29,400 Salvage value in 8 years $0 Annual cash operating costs $35,300 Depreciation is $10,060 per year for the...
Henrie’s Drapery Service is investigating the purchase of a new machine for cleaning and blocking drapes. The machine would cost $126,175, including freight and installation. Henrie’s has estimated that the new machine would increase the company’s cash inflows, net of expenses, by $35,000 per year. The machine would have a five-year useful life and no salvage value. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using table. Required: 1. Compute the...
A company is considering the installation of a new machine at a cost of $60000 to replace a machine purchased 7 years ago for $100000. The disposal value of the old machine is $15000. Both machines will have similar outputs and will produce work of identical quality. The estimated yearly costs of operating old machine is $22,000 and that of new machine is $11,000. Both machines have an estimated remaining life of 3 years, at which time both machines will...
Vandezande Inc. is considering the acquisition of a new machine that costs $361,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are (Ignore income taxes.): Vandezande Inc. is considering the acquisition of a new machine that costs $361,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash...