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In: Finance
ZZY Inc. is considering replacing a machine. These are the data for both the used and...
ZZY Inc. is considering replacing a machine. These are the data for both the used and new machine. Used machine: the machine was purchased for $15323 two years ago, the current salvage value is $11758 and is expected to have a scrap value of $6110 whenever it is retired. This used machine still has 5 years left of service. From now on, the operating and Maintenance costs are $2469 for the first year and expected to increase by $1044 thereafter. New Machine: machine costs $13823 and is expected to have a scrap value of $8546 whenever it is retired. Operating and Maintenance costs are $1777 for the first year and expected to increase by $1122 thereafter. The service life of this machine is 4 years. If the MARR is 9%, determine the minimum equivalent uniform annual cost associated with the optimal economic life of the machine that offers the lowest EUAC.
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jeff jeffy answered 2 years agoRelated Solutions
ZZY Inc. is considering replacing a machine. These are the data for both the used and...
ZZY Inc. is considering replacing a machine. These are the data
for both the used and new machine. Used machine: the machine was
purchased for $15323 two years ago, the current salvage value is
$11758 and is expected to have a scrap value of $6110 whenever it
is retired. This used machine still has 5 years left of service.
From now on, the operating and Maintenance costs are $2469 for the
first year and expected to increase by $1044 thereafter....
Toshiba Inc. is considering replacing a machine. These are the data for both the used and...
Toshiba Inc. is considering replacing a machine. These are the
data for both the used and new machine.
Used machine: the machine was purchased for $16,050 two years
ago, the current salvage value is $10884 and is expected to have a
scrap value of $7411 whenever it is retired. This used machine
still has 4 years left of service. From now on, the operating and
Maintenance costs are $2293 for the first year and expected to
increase by $1015 thereafter....
Top-Ten Inc. is considering replacing its existing machine that is used to produce musical CDs. This...
Top-Ten Inc. is considering replacing its existing machine that
is used to produce musical CDs. This existing machine was purchase
3 years ago at a base price of $50,000. Installation costs at the
time for the machine were $1,000. The existing machine is
considered a 3-year class for MACRS. The existing machine can be
sold today for $40,000 and for $10,000 in 3 years. The new machine
has a purchase price of $90,000 and is also considered a 3-year
class...
Hughes Corporation is considering replacing a machine used in the manufacturing process with a new
Hughes Corporation is considering replacing a machine used in the manufacturing process with a new, more efficient model. The purchase price of the new machine is $150,000 and the old machine can be sold for $100,000. Output for the two machines is identical; they will both be used to produce the same amount of product for five years. However, the annual operating costs of the old machine are $18,000 compared to $10,000 for the new machine. Also, the new machine...
Havoc Industries is considering replacing a machine that is presently used in its production process. What...
Havoc Industries is considering replacing a machine that
is presently used in its production process. What would be the
result of the differential analysis?
Old Machine
Replacement
Machine
Original cost
$55,000
$45,000
Remaining useful life in years
5
5
Current age in years
5
0
Book value
$33,000
Current disposal value in cash
$10,000
Future disposal value in cash (in 5 years)
$0
$0
Annual cash operating costs
$8,000
$4,000
($23,000)
$35,000
($15,000)
$15,000
Lexigraphic Printing Company is considering replacing a machine that has been used in its factory for...
Lexigraphic Printing Company is considering replacing a machine
that has been used in its factory for four years. Relevant data
associated with the operations of the old machine and the new
machine, neither of which has any estimated residual value, are as
follows:
Old Machine
Cost of machine, 10-year life
$89,000
Annual depreciation
(straight-line)
8,900
Annual manufacturing costs,
excluding depreciation
23,600
Annual non-manufacturing operating
expenses
6,100
Annual revenue
74,200
Current estimated selling price of
machine
29,700
New Machine
Purchase price...
Your company is considering replacing an old machine with a new machine. The new machine will...
Your company is considering replacing an old machine with a new
machine. The new machine will cost $1 million, will last for 5
years, and will have a salvage value of $200,000 at the end of five
years. If the company replaces the old machine with the new
machine, pre-tax operating costs will go down by $300,000 per year.
The cost of the new machine ($1 million) will be depreciated over
the 5 years life of the project using the...
Granite Solutions manufactures high-end kitchen counters. They are considering replacing a machine used in manufacturing with...
Granite Solutions manufactures high-end kitchen counters. They
are considering replacing a machine used in manufacturing with a
newer, more efficient model. The new machine costs $400,000 and
will be used for 6 years, at which point its salvage value will be
$80,000. Their current machine was purchased for $250,000 eight
years ago. Granite Solutions can sell their current machine for
$130,000 today or for $8,000 at the end of 6 years.
The firm's marginal tax rate is 41% and the...
Zankel Incorp is considering replacing its old machine with a new machine. The cost of a...
Zankel Incorp is considering replacing its old machine with a
new machine. The cost of a new machine is RM 300,000 with a useful
life of 4 years. The machine has an estimated salvage value of RM
45,000. The cost of installing this new machine will be RM 20,000.
In the initial period, RM 125,000 in net working capital is
required and to be recovered at the ending life of the machine.The
company was using the present machine for 4...
Zankel Incorp is considering replacing its old machine with a new machine. The cost of a...
Zankel Incorp is considering replacing its old machine with a
new machine. The cost of a new machine is RM 300,000 with a useful
life of 4 years. The machine has an estimated salvage value of RM
45,000. The cost of installing this new machine will be RM 20,000.
In the initial period, RM 125,000 in net working capital is
required and to be recovered at the ending life of the machine. The
company was using the present machine for...
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