Current Attempt in ProgressSwifty Corporation is contemplating the replacement of an oldmachine with a new one. The following information has beengathered:Old MachineNew Machine$420000$210000PriceAccumulated Depreciation63000-0-10 yearsRemaining useful life-0-10 yearsUseful life-0-Annual operating costs$126000$168000If the old machine is replaced, it can be sold for $16800.Which of the following amounts is a sunk cost?O $420000o $126000O $147000O $168000

Sunk cost: Sunk cost is the cost that has been incurred as a result of past events and such cost may…

Answered: Current Attempt in Progress Swifty…

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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3. You are confronted with a decision whether to replace an old transit mixer or to purchase a new one of the same model and capacity. The following information is given, namely: Replacement (Brand New) 3,200,000 65,000 300,000 15 year Retention (Refurbished) Initial Cost, P 550,000 Operating Cost, P/year Salvage value Life, year 210,000 30,000 5 Assuming interest rate is 6% per year, would you recommend to retain (with refurbishment) or to totally replace the equipment now? What are the implications of your decision? Explain your answer.
Swifty Corp. is considering purchasing one of two new processing machines. Either machine would make it possible for the company to produce its products more efficiently than it is currently equipped to do. Estimates regarding each machine are provided below: Machine A Machine B Original cost $113,400 $270,000 Estimated life 10 years 10 years Salvage value -0- -0- Estimated annual cash inflows $29,700 $60,400 Estimated annual cash outflows $7,500 $15,000 (a) Calculate the net present value and profitability index of each machine. Assume an 8% discount rate. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 2 decimal places e.g. 589.71. Enter negative amounts using either a negative sign preceding the number e.g. -45.35 or parentheses e.g. (45.35).) Machine A Machine B
BH is considering the manufacture of a new product which requires the use of both a new machine and existing machine. The following information has been prepared: (a) - current purchase price - residual value end Year 5 New Machine 2$ 450,000 30,000 (b) Existing Machine - cost 2 years ago - current written down value - current disposal value - residual value end Year 5 2$ 240,000 180,000 100,000 NIL The existing machine has sufficient spare capacity for the manufacture of the new product with no alternative use (c) New Product - life 5 years. Sales, 15,000 units per year at $ 46 per unit Cost per Unit Material Direct Labour, 2 hours at $ 8 per hour Variable overhead 16 4 Fixed overhead 10 (including depreciation of the new machine) (d) working capital required $ 45,000 immediately, it will remain at $ 45,000 during the Years 1 to 5 (e) direct labour is in short supply. It would need to be diverted from other work currently earning a $ 4 per hour (f) proceeds from the disposal of the…
Current Attempt in Progress BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do, Estimates regarding each machine are provided below. Original cost Estimated life i Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A Profitability index $78,300 Which machine should be purchased? 8 years $19,700 $5,040 Machine A 0 should be purchased Click here to view the factor table Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. Of the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). Round answer for present value to O decimal places, s 125 and profitability index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided) Machine B $185,000 8 years 0…
RR
Crane Corp. is considering purchasing one of two new processing machines. Either machine would make it possible for the company to produce its products more efficiently than it is currently equipped to do. Estimates regarding each machine are provided below: Machine A Machine B Original cost $113,900 $278,300 Estimated life 10 years 10 years Salvage value -0- -0- Estimated annual cash inflows $29,700 $60,100 Estimated annual cash outflows $7,600 $14,800 Calculate the net present value and profitability index of each machine. Assume an 8% discount rate. Machine A Machine B Net present value top row, profitability index bottom row Which machine should be purchased? Crane Corp. should purchase select a machine .
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?
Gadot Company operates an oil platform at the Pacific Ocean. An oil platform was built by the Company at a cost of P25,000,0000 on January 1, 2011, the present value of expected restoration costs at that time was P5,000,000. The oil platform has an estimated useful life of 20 years, with no residual value. On December 31, 2020, the Company was offered P18,000,000 to sell the platform. The selling costs would be P2,500,0000. The value in use of the platform is P13,000,000. How much is the impairment loss for the year 2020? a. None b. 2,500,000 c. 2,000,000 d. 500,000
QUESTION 5 Use the information provided below to answer the following questions. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. 5.1 5.2 5.3 5.4 5.5 Calculate the Payback Period of both machines (expressed in years, months and days.) Which machine should be chosen on the basis of payback period only? Why? Calculate the Accounting Rate of Return (on average investment) of Machine A (expressed to two decimal places). Calculate the Net Present Value of each machine (amounts expressed to the nearest Rand.) Calculate the Internal Rate of Return of Machine B (expressed to two decimal places) using interpolation.
Option E) is incorrect . Please solve correctly
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.…
Sheridan Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A $78,200 8 years Profitability index 0 $19,800 $5,130 Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative, use either a negative sign preceding the number eg-45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, eg. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Machine A Machine B $182,000 8 years $39,600 $10,180 Machine B

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