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 ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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
>
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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