Bramble Corp. is considering the replacement of a piece of equipment with a newer model. The following data has been collected: New Equioment $320000 Old Equipment Purchase price $192000 Accumulated 76800 -0- depreciation Annual operating 255000 222000 costs If the old equipment is replaced now, it can be sold for $52600. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) (net effect on current year net income) of replacing the old equipment with the new equipment is (dori't consider annual operating costs in the computation) O $(11400) O $76800 O $(63000) O 552600

Bramble Corp. is considering the replacement of a piece of equipment with a newer model. The following data has been collected: New Equioment $320000 Old Equipment Purchase price $192000 Accumulated 76800 -0- depreciation Annual operating 255000 222000 costs If the old equipment is replaced now, it can be sold for $52600. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) (net effect on current year net income) of replacing the old equipment with the new equipment is (dori't consider annual operating costs in the computation) O $(11400) O $76800 O $(63000) O 552600

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The pharmacy’s delivery van cost $12,000.00. Its estimated useful life is 10 years, and the disposal value is $1,500.00. What is the annual depreciation? (round to the nearest whole number) Group of answer choices $1,050.00 $3,000.00 $2,700.00 $11,850.00
There is old machinery with a value of $95,565, with an expected life of 20 years. There is a sale of old equipment with a book value of $30,000 and a market value of $66,000.It is intended to replace that machine with a new one worth $145,000 with a useful life of 10 years. It will ultimately be sold at market value for $90,000, to generate salvage value.Old operating costs are $95,565 and new costs are $56,984. There is an initial working capital of $35,000, with movements of 15% of the initial working capital untilyear 6. From year 7 and 8 they are 20% of the initial working capital and in the ninth year 14% of the initial working capital.The WACC required for this project is 17% with a tax rate of 38.5%. The following table shows the depreciation of the new equipment.Depreciation1 20%2 15%3 15%4 10%5 10%6 10%7 7%8 5%9 5%10 3%Calculate your PV, NPV, IRR, TIRM, PAYBACK, IR and ROIPlease if you can send me the excel to: 0229275@up.edu.mxor tell me the steps to follow and if you can…
Ratio analysis "up and down" is applied from which of the following directions? a) vertical relationships b) external and internal relationships c) horizontal relationships O d) Show relationships between financial statement accounts Jay
A delivery car had a first cost of $40,000, an annual operating cost of $18,000, and an estimated $3500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 11% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle? The market value of the used vehicle is determined to be $
Wizard Company has an old machine that is fully depreciated but has a current salvage value of $10,000. The company wants to purchase a new machine that would cost $60,000 and have a five-year useful life and zero salvage value. Expected changes in annual revenues and expenses if the new machine is purchased are: Increased revenues $10,000 $120,000 Increased expenses 14,000 Salary of additional operator Supplies Depreciation 12,000 Maintenance Increased net income 8.000 20.000 $30,000 (ignore income taxes in this problem.) Required: 1. What is the payback period on the new equipment? 2. What is the simple rate of return on the new equipment?
A delivery car had a first cost of $36,000, an annual operating cost of $16,000, and an estimated $3500 salvage value after its 6-year life. Due to an economic slowdown, the car will be retained for only 3 years and must be sold now as a used vehicle. At an interest rate of 14% per year, what must the market value of the used vehicle be in order for its AW value to be the same as the AW if it had been kept for its full life cycle? The market value of the used vehicle is determined to be $ .
The AW values for retaining a presently owned machine for additional years are shown in the table. Note that the values represent the AW amount for each of the n years that the asset is kept, i.e., if it is kept 5 more years, the annual worth is $−95,000 for each of the 5 years. Assume that future costs remain as estimated for the replacement study and that used machines like the one presently owned will always be available. (a) What is the ESL and associated AW of the defender at a MARR of 12% per year? (b) A challenger with an ESL of 7 years and an AWC = $-88,000 per year has been identified. Which AW will be less for the respective ESL periods? Retention Period, Years AW Value, $ per Year 1 -87,000 2 -93,000 3 -85,000 4 -83,000 5 -95,000 a) The ESL of the defender is_____ year(s) with the lowest AW of $_________ . b) The______________ has the lower AW at _________$ for n equal to ______ .
Salsa Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $300,000 $600,000 Accumulated Depreciation 89,300 Remaining useful life 10 years Useful life 10 years Annual operating costs $240,000 $180,600 If the old machine is replaced, it can be sold for $24,000. How much is the sunk cost?
International Soup Company is considering replacing a canning machine. The old machine is being depreciated by the straight-line method over a 10-year recovery period from a depreciable cost basis of $120,000. The old machine has 5 years of remaining usable life, at which time its salvage value is expected to be zero, and it can be sold now for $40,000. This machine has a current book value of $60,000. The purchase price of the new machine is $250,000. Employees were sent to a training course last year on how to use the new machine; this training cost $5,000. The new machine has a 5-year life and an expected salvage value of $25,000. Annual savings of electricity, labor, and materials from use of the new machine are estimated at $40,000. The company is in a 40 percent tax bracket and its cost of capital is 16 percent. The MACRS depreciation method will be used and the recovery percentages for assets with a 5-year class life are given below: What is the initial cash outlay for the…
An oven at a bakery is being considered for replacement. Its salvage value and maintenance costs for several years are given in the table below. The first cost of a new oven is $80,000, including installation, with a MARR of 10%. What is the economic service life for this oven? Year Salvage value at end of year Maintenance costs 0 $20,000 $ 1 75,000 500 2 70,000 500 3 66,000 1000 4 62,000 3000
Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $20,000 salvage value Additional annual information for this new product line follows PV of $. EX of St. PVA of Stand EVA of $ (Use appropriate factors) from the tables provided) Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation Machinery 1. Determine income and net cash flow for each year of this machine's life. 2. Compute this machine's payback period, assuming that cash flows occur evenly throughout each year 3. Compute net present value for this machine using a discount rate of 7% Complete this question by entering your answers in the tabs below. Required 1 Required 2 year 4 Required 3 Compute net present value for this machine using a discount rate of 7%. (Do not round intermediate calculations. Negative amounts should be entered with a minus sign.…
B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $240,000 and has a 12-year life and no salvage value. The expected annual income for each year from this equipment follows. Sales of new product $ 150,000 Expenses Materials, labor, and overhead (except depreciation) 80,000 Depreciation—Equipment 20,000 Selling, general, and administrative expenses 15,000 Income $ 35,000 (a) Compute the annual net cash flow.(b) Compute the payback period.(c) Compute the accounting rate of return for this equipment.