Coronado Industries is contemplating the replacement of an oldmachine with a new one.. The following information has beengathered:Old Machine New Machine$260000$520000Price78000Accumulated Depreciation0-Remaining useful life10 years-0-10 yearsUseful life-0-Annual operating costs$215000$156000If the old machine is replaced, it can be sold for $20800. Thecompany uses straight-line depreciation with a zero salvage valuefor all of its assetsThe net advantage (disadvantage) of replacing the old machine isO$(5200)O $(52000)$21500$90800

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Answered: Coronado Industries is contemplating…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sheridan Inc. wants to purchase a new machine for $44,300, excluding $1,500 of installation costs. The old machine was purchased 5 years ago and had an expected economic life of 10 years with no salvage value. The old machine has a book value of $2,200, and Sheridan Inc. expects to sell it for that amount. The new machine will decrease operating costs by $10,000 each year of its economic life. The straight-line depreciation method will be used for the new machine for a 6-year period with no salvage value. Click here to view the factor table. (a) Determine the cash payback period. (Round cash payback period to 2 decimal places, e.g. 10.53.) Cash payback period 4.36 years (b) Determine the approximate internal rate of return. (Round answer to 0 decimal places, e.g. 13%. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Internal rate of return % (c) Assuming the company has a required rate of return of 9%, determine whether the new machine should…
A company is considering purchasing a machine that costs $400,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the machine is purchased, annual revenues are expected to be $100,000 and annual operating expenses exclusive of depreciation expenses are expected to be $38,000. The straight-line method of depreciation would be used. The cash payback period on the machine is: Select one: a. 33.3 years b. 30 years c. 4.5 years d. 6.45 years e. 3.2 years f. 6
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Current Attempt in Progress Swifty Corporation is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine $420000 $210000 Price Accumulated Depreciation 63000 -0- 10 years Remaining useful life -0- 10 years Useful life -0- Annual operating costs $126000 $168000 If the old machine is replaced, it can be sold for $16800. Which of the following amounts is a sunk cost? O $420000 o $126000 O $147000 O $168000
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