(a) Calculate the net present value of the new packaging machine. Assume that Pina Colada Vita uses an 9% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, e.g. 58,971.75. Enter negative amount using a negative sign preceding the number, e.g. -59,991 or parentheses eg. (59,991)) Net present value $ (b) Do you recommend that Pina Colada Vita purchase the new machine? Yes v 10918.13 (c) Assume that Pina Colada Vita has adopted a new 12% discount rate. Calculate the net present value of the new packaging machine. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, eg 58,971.75. Enter negative amount using a negative sign preceding the number, e.g. -59,991 or parentheses eg. (59.991)) Net present value 8835.00
(a) Calculate the net present value of the new packaging machine. Assume that Pina Colada Vita uses an 9% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, e.g. 58,971.75. Enter negative amount using a negative sign preceding the number, e.g. -59,991 or parentheses eg. (59,991)) Net present value $ (b) Do you recommend that Pina Colada Vita purchase the new machine? Yes v 10918.13 (c) Assume that Pina Colada Vita has adopted a new 12% discount rate. Calculate the net present value of the new packaging machine. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, eg 58,971.75. Enter negative amount using a negative sign preceding the number, e.g. -59,991 or parentheses eg. (59.991)) Net present value 8835.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject : Accounting
Transcribed Image Text:Pina Colada Vita produces a wide range of herbal supplements sold nationwide through independent distributors. In response to an
increasing demand for its products, the company is considering the purchase of a new packaging machine to replace the seven-year-
old machine currently in use. The new machine will cost $165,050, and installation will require an additional $3,050. The machine has
a useful life of 10 years and is expected to have a salvage value of $4,045 at that time. The variable cost to operate the new machine is
$10.45 per carton compared to the current machine's variable cost of $10.55 per carton, and Pina Colada Vita expects to pack
248,000 cartons each year. If the new machine is purchased, Pina Colada Vita will avoid a required $10,425 overhaul of the current
machine in four years. The current machine has a market value of $12,475.
Click here to view the factor table.
(a) Calculate the net present value of the new packaging machine. Assume that Pina Colada Vita uses an 9% discount rate. (For
calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, e.g. 58,971.75.
Enter negative amount using a negative sign preceding the number, e.g. -59,991 or parentheses e.g. (59,991))
Net present value $
(b) Do you recommend that Pina Colada Vita purchase the new machine?
Yes v
10918.13
(c) Assume that Pina Colada Vita has adopted a new 12% discount rate. Calculate the net present value of the new packaging machine.
(For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 2 decimal places, e.g.
58,971.75. Enter negative amount using a negative sign preceding the number, e.g. -59,991 or parentheses eg. (59,991))
Net present value $
8835.08
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 6 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education