DEF Co. is considering replacing an old machine with a new machine. The fiancial details are as follows: Old Machine: New Machine: Cost Selling Price Total operating Costs over 6 years Cost Total operating Costs over 6 years 50,000 20,000 240,000 2. Should the Old Machine be replaced and why? 100,000 310,000 Required: 1. Calculate the Differential Income (Loss) of replacing the Old Machine (Alt 1) with the New Machine (Alt 2).

DEF Co. is considering replacing an old machine with a new machine. The fiancial details are as follows: Old Machine: New Machine: Cost Selling Price Total operating Costs over 6 years Cost Total operating Costs over 6 years 50,000 20,000 240,000 2. Should the Old Machine be replaced and why? 100,000 310,000 Required: 1. Calculate the Differential Income (Loss) of replacing the Old Machine (Alt 1) with the New Machine (Alt 2).

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 7EB: An auto repair company needs a new machine that will check for defective sensors. The machine has an...

See similar textbooks

Similar questions

ingremng ly obede D T ta V ign Home Tooly Engineering foone Sign In Profit = 1,365,827-980,000 = 385,827 IQD ((This machine should be purchased, as it is considered to be profitable)) H.W 1- Find the internal rate using the method of Internal Rate of Return (IRR) if 1= 15%, for the table shown below. If the initial cost is (220,000 U) 350 380 400 0 0 500 1000 770 450 500 550 470 Cost (U) Revenue 780 650 690 450 880 660 890 770 (U) Year 1 2 3 4 5 6 8 10 0 AM 油

Q1/A Factory owner estimates from his past records that the costs per year for operating machine whose purchase price when new is 45000 $ and its reseal value are given below: C year reseal value operating cost 2 3 1 30000 25000 18000 2000 2200 2400 After 3 years, the operating cost increasing by 5400 $ for each year, the resale value decreases by 2800, what is the best replacement policy?
Please look at snippet to answer question Fill in the differential analysis. Replace or Keep DecisionDifferential Analysis Report Cost of replacing old machine: Annual differential decrease in cost fill in the blank x number of years fill in the blank Total differential decrease in cost fill in the blank Proceeds from sale of present machine fill in the blank fill in the blank Cost of new machine fill in the blank Net differential (increase)/decrease in cost, six year total $fill in the blank
Two alternative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 27%, and an after-tax MARR of 11%. Capital investment Life Calculate the AW value for the Machine A. Machine A $23,000 12 years $4,000 Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 11%er year. AWA (11%) = $ (Round to the nearest dollar.) Machine B $33,000 6 years $1,500 $197,000 $176,000 $152,000 $130,000
! 1 Q A N Current Attempt in Progress Bramble Corp. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Price @ 2 Accumulated Depreciation Remaining useful life Useful life Annual operating costs W S O $26000 O $38000 O $(6200) O $(62000) Save for Later → X command If the old machine is replaced, it can be sold for $24000. The net advantage (disadvantage) of replacing the old machine is # 3 E с Old Machine New Machine $330000 $620000 D $ At 4 120000 C 10 years -0- $260000 R F do 50 % V -0- 10 years $196600 G Search or type URL -0- T G MacBook Pro ^ 6 Y B & 7 H ☆ U * 00 N 8 Attempts: 0 of 1 used Submit Answer J + 1 ( - O 9 K M * ) O 2 O command { [
Waterways Continuing Problem 12 a Waterways puts much emphasis on cash flow when it plans for capital investments. The company chose its discount rate of 9% based on the rate of return it must pay its owners and creditors. Using that rate, Waterways then uses different methods to determine the best decisions for making capital outlays. This year Waterways is considering buying five new backhoes to replace the backhoes it now has. The new backhoes are faster, cost less to run, provide for more accurate trench digging, have comfort features for the operators, and have 1-year maintenance agreements to go with them. The old backhoes are working just fine, but they do require considerable maintenance. The backhoe operators are very familiar with the old backhoes and would need to learn some new skills to use the new backhoes. The following information is available to use in deciding whether to purchase the new backhoes. Old Backhoes New Backhoes Purchase cost when new $88,600 $197,129…
Calculate the profitability of the following proposal using the Average rate of return (ARR) method Proposal I Automatic machine Cost OMR 320000 Estimated life 5 years, scrap value OMR 25000, The estimated profits are given below Year Profits 1 75000 21 55000 3. 60000 4. 70000 80000 O a. 37.71% O b. 36.00% 39.42% O d. All the options are wrong earch 近

Two altemnative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 25%, and an after-tax MARR of 10%. Capital investment Life Machine A $20,000 12 years $3,500 Calculate the AW value for the Machine A. AWA (10%) = $(Round to the nearest dollar.) Terminal BV (and MV) Annual receipts Annual expenses Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Machine B $34,000 9 years $2,000 $144,000 $142,000 $190,000 $163,000
b. Table Q4(i) and Q4(ii) provides the information on Item E and Item F for the assessment of Replacement Analysis. Determine the Abandonment period for item E in considering all necessary values. Tables are provided below. Question 4 Table Q4(i) Information on Item E Total Marginal Cost (TC) End of Year EUAC 1 $35k 27k 2 29k 22k 3 25k 21k 4 22k 23k End of Year Table Q4(ii): Information on Item F Total Marginal Cost (TC) EUAC 25k 27k 26k 1 $30k 27k 23k 2 3 4 21k 28k
Data Using Incremental with EUAW analysis find the best alternative, MARR = %10. You should use Excel and show your equations separately, see below example: [A Benefit - [IC (A/P, i%, n) - Salvage (A/F, i, n)] + A Cost+ G Cost (A/G, i, n)] First Cost Salvage Value Annual Benefit M&O M&O Gradient Useful Life, Years A $2,300,000 $85,000 $580,000 $65,000 $10,000 10 B $2,750,000 $125,000 $670,000 $78,000 $15,000 10 с $2,550,000 $95,000 $650,000 $72,000 $12,500 10
Question 7 A company can invest in two alternatives: Machine Eco and Machine Top. The controlling department provides the following data. Eco total annual costs annual sales 3.600.000,00 € 4.000.000,00 € 3.000.000,00 € € 8 purchasing price machine residual value useful life (years) The cost of capital are 10%. How would you decide using the • profit comparison calculation and the profitability comparison? When will the machines be amortized? Question 8 Top 3.700.000,00 € 4.200.000,00 € 4.500.000,00 € € 8 Please refer to question no. 7. What would be the results Eco had a residual value of € 500.000,-- and Top of € 600.000,--?
Solve the quantitative analysis problembelow: Formulas: BEP : Fixed cost / (selling price per unit)-(variable cost per unit) : f / s - v profit : sX - f - vX (selling price per unit)(number of units sold) - [fixed cost + ( variable costs per unit)(number of units sold)] Jacob&Zach Co is a company that offers financial advice for people want to plan their retirement ahead of time. This company offers seminars and trainings on important topics related to retirement planning. For every seminar, the company rents a conference hall for P5,000.00. The company also spends a total of P7,500.00 to cover the cost of advertising and other expenses related to the conduct of the seminar. In every seminar, the company gives token to all attendees and each token costs P85.00. Lastly, the companycharges P350.00 per person who wants to attend seminar. Questions:1.) How many people should attend the seminar to break-even? 2.) Given this BEP number, how much is the a. revenue?b.…