The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value isexpected to be $379,400. This new equipment would require maintenance costs of $94,200 at the end of the fifth year. The cost ofcapital is 9%.Click here to view PV table.Use the net present value method to determine the following: (If net present value is negative then enter with negative sign preceding thenumber e.g. -45 or parentheses e.g. (45). Round present value answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimalplaces as displayed in the factor table provided.)Calculate the net present value.Net present value $292147Determine whether Oriole should purchase the new machine to replace the existing machine?No Oriole Inc. manufactures snowsuits. Oriole is considering purchasing a new sewing machine at a cost of $2.45 million. Its existingmachine was purchased 5 years ago at a price of $1.8 million; six months ago, Oriole spent $55,000 to keep it operational. The existingsewing machine can be sold today for $211,855. The new sewing machine would require a one-time, $85,000 training cost. Operatingcosts would decrease by the following amounts for years 1 to 7:Year 1234567$390,600399,400411,000425.900432,000434,600436,400The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value isexpected to be $379,400. This new equipment would require maintenance costs of $94,200 at the end of the fifth year. The cost ofcapital is 9%.Click here to view PV table

Oriole Inc. manufactures snowsuits. Oriole is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased 5 years ago at a price of $1.8 million; six months ago, Oriole spent $55,000 to keep it operational. The exist sewing machine can be sold today for $211,855. The new sewing machine would require a one-time, $85,000 training cost. Operati costs would decrease by the following amounts for years 1 to 7: Year 1 2 3 4 5 6 7 $390,600 399,400 411,000 425,900 432,000 434,600 436,400 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 $379,400. This new equipment would require maintenance costs of $94,200 at the end of the fifth year. The cost of

Oriole Inc. manufactures snowsuits. Oriole is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased 5 years ago at a price of $1.8 million; six months ago, Oriole spent $55,000 to keep it operational. The exist sewing machine can be sold today for $211,855. The new sewing machine would require a one-time, $85,000 training cost. Operati costs would decrease by the following amounts for years 1 to 7: Year 1 2 3 4 5 6 7 $390,600 399,400 411,000 425,900 432,000 434,600 436,400 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 $379,400. This new equipment would require maintenance costs of $94,200 at the end of the fifth year. The cost of

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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The Fleming Company, a food distributor, is considering replacing a filling line at its Oklahoma City warehouse. The existing line was purchased several years ago for $3,600,000. The line’s book value is $445,000, and Fleming's management feels it could be sold at this time for $350,000. A new, increased capacity line can be purchased for $2,575,000 and will require and increase in NWC of $55,000. Delivery and installation of the new line are expected to cost $50,000 and 215,000 respectively. Assuming Fleming’s marginal tax rate is 35%, calculate the net investment for the new line.
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The answers are provided, but need help discovering how to get them.
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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 $240,352. 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 $390,600 2 400,200 3 410,000 4 425,200 5 432,400 6 435,500 7 436,300 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 $380,500. This new equipment would require maintenance costs of $94,900 at the end of the fifth year. The cost of capital is 9%. Use the net present value method to determine the following: (If net present value is negative then enter with negative sign…
Waterway Inc. manufactures snowsuits. Waterway 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, Waterway spent $55,000 to keep it operational. The existing sewing machine can be sold today for $243,257. 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 $390,900 2 399,900 3 410,400 4 425,200 5 432,600 435,300 7 437,700 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 $379,700. This new equipment would require maintenance costs of $98,400 at the end of the fifth year. The cost of capital is 9%. Click here to view PV 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 e.g. -45 or…
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Gonzalez Corporation manufactures a children's bicycle, model CT8. Gonzalez currently manufactures the bicycle frame. During 2023, Gonzalez made 30,000 frames at a total cost of $750,000. Ryan Corporation has offered to supply as many frames as Gonzalez wants at a cost of $23.50 per frame. Gonzalez anticipates needing 33,000 frames each year for the next few years. Required Requirement 1. (a) What is the average cost of manufacturing a bicycle frame in 2023? How does it compare to Ryan's offer? The average cost of $ per frame is than Ryan's offer. (b) Can Gonzalez use the answer in requirement 1a to determine the cost of manufacturing 33,000 bicycle frames? Explain. Gonzalez take the average manufacturing cost in 2023 to determine the total cost of manufacturing 33,000 bicycle frames. The reason is that Requirement 2. Gonzalez's cost analyst uses annual data from past years to estimate the following regression equation with total manufacturing costs of the bicycle frame as the…