**Finch Freight Company Truck Replacement Analysis**Finch Freight Company owns a truck that originally cost $41,000. Currently, this truck’s book value is $24,000, with an expected remaining useful life of four years. Finch has an opportunity to purchase a new, extremely fuel-efficient replacement truck for $30,500. The fuel cost savings with the new truck are anticipated to be $6,100 less per year than the old truck. Despite being in good condition, the current truck can only be sold for $18,000.**Required:**Calculate the total relevant costs to determine if Finch should replace the old truck with the new fuel-efficient model or continue using the old truck until it wears out.**Analysis Table:**| | Keep Old Truck | Replace With New Truck ||---------------------|----------------|------------------------|| Total Relevant Costs| | |**Decision Options:**- Choose to **Replace the old truck**.- Choose to **Continue to use the old truck**.The table is designed to help calculate and compare the costs associated with keeping the old truck versus replacing it. The decision will be based on the total relevant costs associated with each option.

Total relevant cost = Realizable value of old truck + Additional fuel cost for four years = $18000 +…

Answered: Finch Freight Company owns a truck that…

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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Speed, Inc., is a shipping company. On 1/1/20, the company purchases a new commercial sleeper truck for $790,000 cash. The expected residual value of the truck is $60,000 and the expected useful life is 10 years. The company estimates that the truck will be used to drive 1,000,000 miles over its useful life (120,000 miles in 2020; 90,000 miles in 2021 & all subsquent years). For the units-of-activity method, round the depreciaiton-per-unit to two decimal places before using it. You PART A - STRAIGHT LINE DEPRECIATION Income StatementDepreciation Expense Year Ended 12/31/2020fill in the blank 1 Year Ended 12/31/2021 fill in the blank 2 Balance SheetAccumulated Depreciation As of 12/31/2020fill in the blank 3 As of 12/31/2021fill in the blank 4 PART B - UNITS-OF-ACTIVITY DEPRECIATION Income StatementDepreciation Expense Year Ended 12/31/2020fill in the blank 5 Year Ended 12/31/2021 fill in the blank 6 Balance SheetAccumulated Depreciation As of 12/31/2020fill in the…
Finch Freight Company owns a truck that cost $46,o00. Currently, the truck's book value is $25,000, and its expected remaining useful life is four years. Finch has the opportunity to purchase for $30,100 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $6,300 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $10.000. Required Calculate the total relevant costs. Should Finch replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out? Keep Old Replace With New Total relevant costs Should Finch replace or continue the old truck? Replace the old truck
A business purchased a delivery truck 5 years ago at a cost of $45,000. It is now planning to replace that truck with a newer one, which would cost $60,000. The old truck has a trade-in value of approximately $12,500.(a1) How much of these truck costs represent sunk costs?
Dog
Your Corporation bought a stamping machine to make the cans. The cost of the machine was $60,000. The machine has a useful life of 5 years and a salvage value of zero at the end of those five years. The variable manufacturing cost of producing the cans is $0.05 per can. The only fixed manufacturing cost is the annual depreciation of $12,000 on the stamping machine. Your Corporation needs 200,000 cans annually. Another Company recently offered to supply all of the can needs for the next four years at $0.07 per can. If Your Company buys the cans, it can sell the stamping machine right now for $35,000. If Your Company buys the cans, what will be the total dollar increase or decrease in income for the total four years? Enter an incrase as a positve number. Enter a decrease with a minus sign in front.
Sooky has a spotter truck with a book value of $57,000 and a remaining useful Ilfe of five years. At the end of the five years the spotte purchase a new spotter truck for $137,000 and receive $32,700 in return for tradlng in Its old spotter truck. The old spotter truck has The new spotter truck will reduce varlable manufacturing costs by $26,700 per year over the five-year Iife of the new spotter truck. replacing the current spotter truck with the new truck is: Multiple Cholce $29,200 decrease $29,200 increase $32,700 increase $137,000 decrease $32,700 decrease
Riverbed, a large manufacturing company, currently uses a large printing press in its operations and is considering two replacements: the PDX341 and PDW581. The PDX costs $493,000 and has annual maintenance costs of $9,300 for the first 5 years and $14,300 for the next 10 years. After 15 years, the PDX will be scrapped (salvage value is zero). In contrast, the PDW can be acquired for $123,250 and requires maintenance of $28,600 a year for its 10-year life. The salvage value of the PDW is expected to be zero in 10 years. Assuming that Riverbed must replace its current printing press (it has stopped functioning), has a(n) 10-percent cost of capital, and all cash flows are after tax, which replacement press is the most appropriate? (Round answers to 2 decimal places, e.g. 125.25.) Chain Replication Approach: NPV of PDX341 $ NPV of PDW581 $ We would prefer Equivalent Annual NPV Approach: Equivalent Annual NPV of PDX341 $ Equivalent Annual NPV of PDW581 $ We would prefer
Carla Vista Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Carla Vista Roofing spent $77,400 refurbishing the lift. It has just determined that another $45,500 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $194,000. The company estimates that both lifts would have useful lives of 5 years. The new lift is more efficient and thus would reduce operating expenses from $110,000 to $84,200 each year. Carla Vista Roofing could also rent out the new lift for about $11,500 per year. The old lift is not suitable for rental. The old lift.could currently be sold for $28,500 if the new lift is purchased. The new lift and old lift are estimated to have salvage values of zero if used for another 5 years. Prepare an incremental analysis showing whether the company should repair or replace the equipment. (Enter negative amounts using…

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