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 $220000 $425000 Accumulated depreciation 95000 -0- Annual operating costs 330000 240000 If the old equipment is replaced now, it can be sold for $80000. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. Both assets have a $0 end-of-life salvage value. What is the cost of the new equipment? O $425000
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- Kingbird 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.For this question only, assume that six months ago Chung’s equipment manager spent $30600 refurbishing the old equipment. Additionally, the equipment manager has determined that the new equipment can be rented out during idle periods to generate $1836 per year. Using this new information, what is the total cash flow associated with replacing the equipment? ($45900) ($321300) ($342720) ($312120)Marigold 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 $630000Crane 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
- 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)Bradley Industries is considering replacing a machine that is presently used in its production process. Which of the following is irrelevant to the replacement decision? Replacement Machine $46,000 Original cost Remaining useful life in years Current age in years Book value. Old Machine $60,000 5 5 OA. the current disposal value of the old machine OB. the original cost of the old machine OC. the sales price of the new machine OD. the annual cash operating costs for both machines 5 0 $30,000 Current disposal value in cash $9.000 Future disposal value in cash (in 5 years) $0 Annual cash operating costs $7,000 Which of the information provided in the table is irrelevant to the replacement decision? $0 $4,500 GETTIBonita Industries is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $250000 $500000 Accumulated Depreciation 75000 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $205000 $150000 If the old machine is replaced, it can be sold for $20000. 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 $(50000) $(5000) $20500 $70000
- Jing Inc. is considering the replacement of a piece of equipment with a newer model. The following data has been collected (see the attached image). If the old equipment is replaced now, it can be sold for P60,000. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years. Each of the assets has no end-of-life salvage value. How much is the net advantage (disadvantage) of replacing the old equipment with the new equipment?Assume that a company is choosing between two alternatives-keep an existing machine or replace it with a new machine. The costs associated with the two alternatives are summarized as follows: Purchase cost (new) Remaining book value Overhaul needed now Existing Machine $ 15,000 $ 6,000 $ 5,000 New Machine $ 22,000 Annual cash operating costs Salvage value (now) Salvage value (eight years from now) $6,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. If the company overhauls its existing machine, it will be usable for eight more years. If it buys the new machine, it will be used for eight years. Assuming a discount rate of 13%, what is the net present value of the cash flows associated with keeping the existing machine? $ 10,500 $ 2,000 $1,000 $ 7,000Salsa 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?
- Crane Corp. is considering purchasing one of two new diagnostic machines. Either machine would make it possible for the company to bid on jobs that it currently isn't equipped to do. Estimates regarding each machine are provided here. Original cost Estimated life Salvage value Estimated annual cash inflows Estimated annual cash outflows Net present value Machine A $77,000 8 years 0 Profitability index $19,900 $4,800 Machine A Which machine should be purchased? Click here to view the factor table. Calculate the net present value and profitability index of each machine. Assume a 9% discount rate. (If the net present value is negative. use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answer for present value to 0 decimal places, e.g. 125 and profitability index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Machine B should be purchased. $188,000 8 years 0 $40,200 $9,860…Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Purchase Price $300,000 $600,000 Accumulated Depreciation 90,000 -0- Annual operating costs $240,000 $180,600 If the old machine is replaced, it can be sold for $30,000. Both machines have a remaining useful life of 10 years. The net advantage (disadvantage) of replacing the old machine is Group of answer choices $30,000 12,000 $24,000 $120,600BH is considering the manufacture of a new product which requires the use of both a new machine and existing machine. The following information has been prepared: (a) - current purchase price - residual value end Year 5 New Machine 2$ 450,000 30,000 (b) Existing Machine - cost 2 years ago - current written down value - current disposal value - residual value end Year 5 2$ 240,000 180,000 100,000 NIL The existing machine has sufficient spare capacity for the manufacture of the new product with no alternative use (c) New Product - life 5 years. Sales, 15,000 units per year at $ 46 per unit Cost per Unit Material Direct Labour, 2 hours at $ 8 per hour Variable overhead 16 4 Fixed overhead 10 (including depreciation of the new machine) (d) working capital required $ 45,000 immediately, it will remain at $ 45,000 during the Years 1 to 5 (e) direct labour is in short supply. It would need to be diverted from other work currently earning a $ 4 per hour (f) proceeds from the disposal of the…