Delaney Company is considering replacing equipment which originally cost $508,000 and which has $355,600 accumulated depreciation to date. A new machine will cost $727,000. What is the sunk cost in this situation? a.$152,400 b.$574,600 c.$508,000 d.$121,920
Q: Delaney Company is considering replacing equipment that originally cost $518,000 and that has…
A: Sunk cost refers to the cost or money which is already expended and irrecoverable in nature.
Q: Analysis of a replacement project At times firms will need to decide if they want to continue to use…
A: NPV(Net Present Value) is excess of present value(PV) of all cash inflows over initial outlay of a…
Q: Marigold Corp. is contemplating the replacement of an old machine with a new one. The following…
A: Sunk costs are costs which have been incurred in the past and are not relevant to decision-making.
Q: Múltiple Choice O O о $(53,014) $(49,014) $(55,014) $(70,014)
A: It represents the amount of profitability in absolute dollar terms generated by the project after…
Q: Daxter Bakers is trying to decide whethe Should keep its existing bread-making machi inological…
A: Let us first understand the meaning of opportunity cost Opportunity cost is the benefit foregone…
Q: At times firms will need to decide if they want to continue to use their current equipment or…
A: NPV is also known as Net Present Value. It is a capital budgeting techniques which help in decision…
Q: Crane Company is contemplating the replacement of an old machine with a new one. The following…
A: Relevant cost is the cost that is different between different alternatives. This cost is considered…
Q: What is the initial book value of a new piece of equipment given the following information? Note…
A: Book value refers to the amount of an asset according to the books or accounts as shown in the…
Q: ose estimated salvage value is zero. Expected before-tax cash savings from the new machine are…
A: Operating cash flow is that amount which is earned by the entity from operating activity of the…
Q: (a) Compute the annual net cash flow. (b) Compute the payback period. (c) Compute the accounting…
A: Payback period (PBP) refers to the period or duration within which the company is able to recover…
Q: Price Accumulated Depreciation Remaining useful life Useful life Annual operating costs Old Machine…
A: A company can replace assets in a way that maximizes value and is in line with its strategic…
Q: A company is considering purchasing factory equipment that costs $400000 and is estimated to have no…
A: Ratio analysis is a fundamental tool that is used in finance and accounting to evaluate the…
Q: BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it…
A: BAK Corporation Sl no…
Q: At times firms will need to decide if they want to continue to use their current equipment or…
A: With regards to Investment examination, it tends to be exceptionally advantageous to realize how to…
Q: At times firms will need to decide if they want to continue to use their current equipment or…
A: Net Present Value of the project is calculated in the excel as below. It is calculated as per the…
Q: BAK Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it…
A: 1. Net Present value = Present value of cash inflows - Initial Investment2. Profitability Index =…
Q: Wizard Company has an old machine that is fully depreciated but has a current salvage value of…
A: Data given:Salvage value of fully depreciated machine= $10,000Cost of new machine= $60,000Useful…
Q: Delaney Company is considering replacing equipment that originally cost $543,000 and has accumulated…
A: The objective of the question is to identify the sunk cost in the given scenario. Sunk costs are…
Q: Bradley Industries is considering replacing a machine that is presently used in its production…
A: Relevant cost in management The term relevant cost really matters. The relevant cost is the cost…
Q: Crane Corp. is considering purchasing one of two new diagnostic machines. Either machine would make…
A: Net present value is the present value of cash flow minus initial investment.The Profitability index…
Q: Assume that management is evaluating the purchase of a new machine as follows: Cost of new…
A: Accounting rate of return method: Accounting rate of return is the amount of income which is earned…
Q: Delaney Company is considering replacing equipment that originally cost $519,000 and that has…
A: A sunk cost means cost that is incurred by the businesses in past but this cost cannot be recovered…
Q: Delaney Company is considering replacing equipment that originally cost $496,000 and has accumulated…
A: Sunk cost means the cost incurred in past and do not have any effect on the current decision-making…
Q: Factor Company is planning to add a new product to its line. To manufacture this product, the…
A: Capital budgeting: It is a method of evaluating the projects which required huge investments and…
Q: Existing Machine New Machine Purchase cost (new) $ 15,000 $ 26,000 Remaining book value $ 6,000…
A: To calculate the financial advantage of replacing the existing machine with a new machine, we shall…
Q: Your company is analyzing two machines to determine which one it should purchase. Whichever machine…
A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…
Q: Delaney Company is considering replacing equipment that originally cost $475,000 and has accumulated…
A: >The question relates to the concept of decision marking. >In decision making process relating…
Q: At times firms will need to decide if they want to continue to use their current equipment or…
A: Calculation of net present value calculated in next step
Q: Delaney Company is considering replacing equipment that originally cost $548,000 and has accumulated…
A: Sunk costs refer to expenses where the money has already been spent and cannot be recovered. This…
Q: Calculate the net present value and profitability index of each machine. Assume a 9% discount rate.…
A: NET PRESENT VALUE Net Present Value is one of the Important Capital Budgeting Technique. Net…
Q: Required information [The following information applies to the questions displayed below.] Beacon…
A: Solution:-The Accounting Rate of Return (ARR) is a financial tool used to assess the profitability…
Q: Delaney Company is considering replacing equipment that originally cost $532,000 and has accumulated…
A: The objective of the question is to determine the sunk cost in the given scenario. Sunk costs are…
Q: a.) Prepare and show in solution a differential analysis dated September 13 on whether to continue…
A: Differential analysis is a management tool used in decision making. In it, only chnages in revenue…
Q: At times firms will need to decide if they want to continue to use their current equipment or…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: The cost of a new machine is $40,000 and the new machine takes $2,000 to install. At the end of its…
A: Depreciation is the way of allocating the capitalized cost of assets over its useful life. The…
Q: A manufacturing company is considering investing in a new machine that costs $50,000. The machine is…
A: Fixed assets are those assets which are being held by business for longer period of time.…
Q: A chemical mixer was purchased 8 years ago for $100,000. If retained, it will require an investment…
A: Given: MARR = 10%. EUAC is nothing but equivalent uniform annual cost. This cost is nothing but the…
Q: The Kish Corporation is considering the purchase of a new commercial oven. company's existing oven…
A: Market value of old machine=$50000Cost of new machine=$375000Life of new machine=5 yearsAnnual…
Q: I have the answer and question below but I just needf to know how to work it out Solve the problem.…
A: The depreciation can be referred to as a noncash expense. The cost of capital assets is not expensed…
Q: = 0. • The old machine was purchased before the new tax law, so it is being depreciated on a…
A: Incremental cash flows refer to the expected increase or decline in the cash flows of the company…
Q: B2B Company is considering the purchase of equipment that would allow the company to add a new…
A: Annual Cash flow is that amount which is earned by the investor from his investment. It is…
Q: net present value and profitability index
A: Net present value = Present value of net annual cash inflows - Present value of initial cash outflow
Q: produce its products more efficiently than it is currently equipped to do. Estimates regarding eac…
A: Net present value = Present value of net annual cash flow - Initial investment Present value of net…
Q: At times firms will need to decide if they want to continue to use their current equipment or…
A: The net present value is the difference between the present value of future cash flows and the…
Q: Keep Machine operator Maintenance cost Cost of defects Depreciable value of old machine Depreciation…
A: Replacement method in capital budget in which incremental cost of replacement is compared to the…
Q: Sheridan Corp. is considering purchasing one of two new diagnostic machines. Either machine would…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Delaney Company is considering replacing equipment which originally cost $508,000 and which has $355,600
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Freida Company is considering an asset replacement project of replacing a control device. This old control device has been fully depreciated but can be sold for $5,000. The new control device, which is more automated, will cost $42,000. The new device’s installation and shipping costs will total $16,000. The new device will be depreciated on a straight-line basis over its 2-year economic life to an estimated salvage value of $0. The actual salvage value of this device at the end of 2-year period (That is, the market value of the device at the end of 2-year period) is estimated to be $4,000. If the replacement project is accepted, Freida will require an initial working capital investment of $2,200 (that is, adding $2,200 initially to its net working capital). During the 1st year of operations, Freida expects its annual revenue to increase from $72,800 to $90,000. After the 1st year, revenues from the replacement are expected to increase at a rate of $2,800 a year for the remainder of…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?
- A machine purchased three years ago for $318,000 has a current book value using straight-line depreciation of $192,000; its operating expenses are $39,000 per year. A replacement machine would cost $227,000, have a useful life of nine years, and would require $10,000 per year in operating expenses. It has an expected salvage value of $71,000 after nine years. The current disposal value of the old machine is $81,000; if it is kept 9 more years, its residual value would be $18,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Machine Total costs Should the old machine be replaced? Purchase New MachineAn asset cost $200,000. It has a salvage value of $40,000. It has a 10 year life. What is its depreciation expense if the company uses straight-line depreciation? Group of answer choices $200,000 $160,000 $20,000 $16,000Factor 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.…
- Hillsong Inc. manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million; six months ago, Hillsong spent $55,000 to keep it operational. The existing sewing machine can be sold today for $245,090. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $389,800 2 399,800 410,200 4 425,400 5 432,400 6 435,000 7 436,000 The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $380,800. This new equipment would require maintenance costs of $99,000 at the end of the fifth year. The cost of capital is 9%. Click here to view the factor table. Use the net present value method to determine the following: (If net present value is negative then enter with negative sign preceding the number eg.…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.At times firms will need to decide if they want to continue to use their current equipment or replace the equipment with newer equipment. The company will need to do replacement analysis to determine which option is the best financial decision for the company. Price Co. is considering replacing an existing piece of equipment. The project involves the following: • The new equipment will have a cost of $9,000,000, and it is eligible for 100% bonus depreciation so it will be fully depreciated at t = 0. • The old machine was purchased before the new tax law, so it is being depreciated on a straight-line basis. It has a book value of $200,000 (at year 0) and four more years of depreciation left ($50,000 per year). • The new equipment will have a salvage value of $0 at the end of the project's life (year 6). The old machine has a current salvage value (at year 0) of $300,000. • Replacing the old machine will require an investment in net operating working capital (NOWC) of…
- Freida Company is considering an asset replacement project ofreplacing a control device. This old control device has been fullydepreciated but can be sold for $5,000. The new control device, whichis more automated, will cost $42,000. The new device’s installation andshipping costs will total $16,000. The new device will be depreciatedon a straight-line basis over its 2-year economic life to an estimatedsalvage value of $0. The actual salvage value of this device at the endof 2-year period (That is, the market value of the device at the end of2-year period) is estimated to be $4,000. If the replacement project is accepted, Freida will require an initial working capital investment of$2,200 (that is, adding $2,200 initially to its net working capital).During the 1st year of operations, Freida expects its annual revenue toincrease from $72,800 to $90,000. After the 1st year, revenues fromthe replacement are expected to increase at a rate of $2,800 a year forthe remainder of the project…1.Maiden Corp is considering the purchase of a new CNC machine tool for use in their research lab. The machine they are thinking about costs $750,000 and has an expected life of five years. Please calculate their depreciation schedule using MACRS. What is the present worth of the depreciation?B2B Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment costs $144,000 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 $ 90,000 Expenses Materials, labor, and overhead (except depreciation) 48,000 Depreciation—Equipment 12,000 Selling, general, and administrative expenses 9,000 Income $ 21,000 (a) Compute the annual net cash flow.(b) Compute the payback period.(c) Compute the accounting rate of return for this equipment. I could not include an image for "C" please answer seperately