Bridgeport Industries is considering the purchase of new equipment costing $1,280,000 to replace existing equipment that will be sold for $194,000. The new equipment is expected to have a $220,000 salvage value at the end of its 5-year life. During the period of its use, the equipment will allow the company to produce and sell an additional 32,800 units annually at a sales price of $29 per unit. Those units will have a variable cost of $15 per unit. The company will also incur an additional $86,000 in annual fixed costs. Identify the amount and timing of all cash flows related to the acquisition of the new equipment. (Enter negative amounts using a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Cash Flow Timing Amount Purchase of new equipment 2$ Salvage of old equipment Sales revenue Variable costs Additional fixed costs Salvage of new equipment
Bridgeport Industries is considering the purchase of new equipment costing $1,280,000 to replace existing equipment that will be sold for $194,000. The new equipment is expected to have a $220,000 salvage value at the end of its 5-year life. During the period of its use, the equipment will allow the company to produce and sell an additional 32,800 units annually at a sales price of $29 per unit. Those units will have a variable cost of $15 per unit. The company will also incur an additional $86,000 in annual fixed costs. Identify the amount and timing of all cash flows related to the acquisition of the new equipment. (Enter negative amounts using a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Cash Flow Timing Amount Purchase of new equipment 2$ Salvage of old equipment Sales revenue Variable costs Additional fixed costs Salvage of new equipment
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 1P: Talbot Industries is considering launching a new product. The new manufacturing equipment will cost...
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![Bridgeport Industries is considering the purchase of new equipment costing $1,280,000 to replace existing equipment that will be
sold for $194,000. The new equipment is expected to have a $220,000 salvage value at the end of its 5-year life. During the period
of its use, the equipment will allow the company to produce and sell an additional 32,800 units annually at a sales price of $29 per
unit. Those units will have a variable cost of $15 per unit. The company will also incur an additional $86,000 in annual fixed costs.
Identify the amount and timing of all cash flows related to the acquisition of the new equipment. (Enter negative amounts using a
negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Cash Flow
Timing
Amount
Purchase of new equipment
$4
Salvage of old equipment
Sales revenue
Variable costs
Additional fixed costs
Salvage of new equipment
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb8a4644e-c0f7-45ab-8ca0-b43744e710eb%2Fdd845f81-f4d3-4988-85e5-0145d928a086%2F6nd6awc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Bridgeport Industries is considering the purchase of new equipment costing $1,280,000 to replace existing equipment that will be
sold for $194,000. The new equipment is expected to have a $220,000 salvage value at the end of its 5-year life. During the period
of its use, the equipment will allow the company to produce and sell an additional 32,800 units annually at a sales price of $29 per
unit. Those units will have a variable cost of $15 per unit. The company will also incur an additional $86,000 in annual fixed costs.
Identify the amount and timing of all cash flows related to the acquisition of the new equipment. (Enter negative amounts using a
negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Cash Flow
Timing
Amount
Purchase of new equipment
$4
Salvage of old equipment
Sales revenue
Variable costs
Additional fixed costs
Salvage of new equipment
>
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