Crane Company is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $340000 $680000 Accumulated Depreciation 102000 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $272000 $204000 If the old machine is repiaced, it can be sold for $27200. The company uses straight-line depreciation with a zero salvage value for all of its assets Which of the following amounts is relevant to the replacement decision?
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- Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: Machine 190-3, which has a cost of $190,000, a 3-year expected life, and after-tax cash flows (labor savings and depreciation) of $87,000 per year; and Machine 360-6, which has a cost of $360,000, a 6-year life, and after-tax cash flows of $98,300 per year. Knitting machine prices are not expected to rise because inflation will be offset by cheaper components (microprocessors) used in the machines. Assume that Filkins’ cost of capital is 14%. Should the firm replace its old knitting machine? If so, which new machine should it use? By how much would the value of the company increase if it accepted the better machine? What is the equivalent annual annuity for each machine?Vaughn Manufacturing is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price $220500 $367500 Accumulated depreciation 88200 - 0 - Annual operating costs 294000 235200 If the old equipment is replaced now, it can be sold for $58800. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets.For the 5-year period, what is the increase or decrease in net income associated with the new equipment? $88200` $58800 $(14700) $(73500)Vaughn Manufacturing is contemplating the replacement of an old machine with a new one. The following information has been gathered: Price Accumulated Depreciation Remaining useful life Useful life Annual operating costs Old Machine New Machine $430000 $860000 O $86000 O $430000 O $129000 Ⓒ$301000 129000 10 years 0 $344000 -0 0 10 years $258000 If the old machine is replaced, it can be sold for $34400. The company uses straight-line depreciation with a zero salvage value for all of its assets. Which of the following amounts is relevant to the replacement decision?
- Waterway Industries is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price $229500 $382500 Accumulated depreciation 91800 - 0 - Annual operating costs 306000 244800 If the old equipment is replaced now, it can be sold for $61200. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets.For the 5-year period, what is the increase or decrease in net income associated with the new equipment? $91800` $(76500) $(15300) $61200Bramble Corp. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $420000 $840000 Accumulated Depreciation 126000 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $335000 $252000 If the old machine is replaced, it can be sold for $33600. The company uses straight-line depreciation with a zero salvage value for all of its assets.The net advantage (disadvantage) of replacing the old machine is $(8400) $33500 $(84000) $23600Crane Company is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $360000 $630000 Accumulated Depreciation 90000 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $280000 $190600 If the old machine is replaced, it can be sold for $24000. Which of the following amounts is a sunk cost? ○ $190600 O $280000 ○ $270000 O $630000
- Waterway Industries is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price $352000 $576000 Accumulated 140800 -0- depreciation Annual operating costs 463000 398000 If the old equipment is replaced now, it can be sold for $95800. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) (net effect on current year net income) of replacing the old equipment with the new equipment is (don't consider annual operating costs in the computation) $(111000) $140800 $95800 $(19400) M CCoronado Industries is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment $172000 Purchase price $288000 68800 Accumulated depreciation -0- 200000 Annual operating costs 229000 If the old equipment is replaced now, it can be sold for $47200. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) of replacing the old equipment with the newequipment is $(10400) O$47200 O $68800 $(57000) ) 11Bramble Corp, is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price $192000 $320000 Accumulated depreciation Annual operating 76800 -0- 255000 222000 costs If the old equipment is replaced now, it can be sold for $52600, Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) (net effect on current year net income) of replacing the old equipment with the new equipment is (don't consider annual operating costs in the computation) O $(11400) O 576800 O $(63000) O $52600
- Coronado Industries is contemplating the replacement of an old machine with a new one.. The following information has been gathered: Old Machine New Machine $260000 $520000 Price 78000 Accumulated Depreciation 0- Remaining useful life 10 years -0- 10 years Useful life -0- Annual operating costs $215000 $156000 If the old machine is replaced, it can be sold for $20800. The company uses straight-line depreciation with a zero salvage value for all of its assets The net advantage (disadvantage) of replacing the old machine is O$(5200) O $(52000) $21500 $90800Marigold Corp. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $430000 $630000 Accumulated Depreciation 102000 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $265000 $186600 If the old machine is replaced, it can be sold for $24000. Which of the following amounts is a sunk cost? $186600 $265000 $328000 $630000Concord Corporation is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price $275000 $448000 Accumulated depreciation 110000 - 0 - Annual operating costs 361000 283000 If the old equipment is replaced now, it can be sold for $74200. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years.Which of the following amounts is irrelevant to the replacement decision? $165000 $373800 $74200 $448000