Question
In: Finance
Burlington is analyzing two machines to determine which one it should purchase. Whichever machine is purchased...
Burlington is analyzing two machines to determine which one it should purchase. Whichever machine is
purchased will be replaced at the end of its useful life. The company requires a 13 percent rate of return and
uses straight-line depreciation to a zero book value over the life of the machine. Machine A has a cost of
$405,000, annual operating costs of $25,000, and a 3-year life. Machine B costs $324,000, has annual
operating costs of $28,000, and a 2-year life. The firm currently pays no taxes. Which machine should be
purchased and why?
A. Machine A;
because it will
save the
company
about $25,706
a year
B. Machine A;
because it will
save the
company
about $21,512
a year
C. Machine B;
because it will
save the
company about
$20,868 a year
D. Machine B;
because it will
save the
company about
$23,937 a year
E. Machine A;
because it will
save the
company
about
$24,109 a
year
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Fishnet is analyzing two machines to determine which one it should purchase. Whichever machine is purchased...
Fishnet is analyzing two machines to determine which one it
should purchase. Whichever machine is purchased will be replaced at
the end of its useful life. The company requires a 13 percent rate
of return and uses straight-line depreciation to a zero book value
over the life of the machine. Machine A has a cost of $405,000,
annual operating costs of $25,000, and a 3-year life. Machine B
costs $313,000, has annual operating costs of $28,000, and a 2-year
life....
Fishnet is analyzing two machines to determine which one it should purchase. Whichever machine is purchased...
Fishnet is analyzing two machines to determine which one it
should purchase. Whichever machine is purchased will be replaced at
the end of its useful life. The company requires a 13 percent rate
of return and uses straight-line depreciation to a zero book value
over the life of the machine. Machine A has a cost of $405,000,
annual operating costs of $25,000, and a 3-year life. Machine B
costs $313,000, has annual operating costs of $28,000, and a 2-year
life....
Brooks, Inc. is analyzing two machines to determine which one it should purchase. Whichever machine is...
Brooks, Inc. is analyzing two machines to determine which one it
should purchase. Whichever machine is purchased will be replaced at
the end of its useful life. The company requires a 12 percent rate
of return and uses straight-line depreciation to a zero book value
over the life of the machine. Machine A has a cost of $485,000,
annual operating costs of $28,500, and a 3-year life. Machine B
costs $300,000, has annual operating costs of $45,400, and a 2-year...
Cabot Enterprise is analyzing two machines to determine which one it should purchase. Whichever machine is...
Cabot Enterprise is analyzing two machines to determine which
one it should purchase. Whichever machine is purchased will be
replaced at the end of its useful life. The company requires a 15
percent rate of return and uses straight-line depreciation to a
zero book value over the life of the machine. Machine A has a cost
of $720,000, annual operating costs of $50,000, and a 8-year life.
Machine B costs $350,000, has annual operating costs of $110,000,
and a 5-year...
Dylan and Co. is analyzing two machines to determine which one it should purchase. The company...
Dylan and Co. is analyzing two machines to determine which one
it should purchase. The company requires a 14% rate of return, has
a 40% marginal tax rate, and uses straight-line depreciation to a
zero book value, which is the expected salvage value after their
lives. Machine A has a cost of $310,000, annual operating costs of
$20,000, and a 4-year life. Machine B costs $210,000, has annual
operating costs of $60,000, and has a 3-year life. Whichever
machine is...
Bruno's is analyzing two machines to determine which one it should purchase. The company requires a...
Bruno's is analyzing two machines to determine which one it
should purchase. The company requires a rate of return of 14%.
Machine A has a cost of $290,000, annual operating costs of $8,000,
and a 3-year life. Machine B costs $180,000, has annual operating
costs of $12,000, and has a 2-year life. Whichever machine is
purchased will be replaced at the end of its useful life. Which
machine should Bruno's purchase and why?
Precision Tool is analyzing two machines to determine which one it should purchase. The company requires...
Precision Tool is analyzing two machines to determine which one
it should purchase. The company requires a 15 percent rate of
return and uses straight-line depreciation to a zero book value
over the life of its equipment. Machine A has a cost of $892,000,
annual operating costs of $28,200, and a 4-year life. Machine B
costs $1,118,000, has annual operating costs of $19,500, and has a
5-year life. Whichever machine is purchased will be replaced at the
end of its...
Lindner Corp. is comparing two machines to determine which one it should purchase. The company requires...
Lindner Corp. is comparing two machines to determine which one
it should purchase. The company requires a rate of return of 14
percent and uses straight-line depreciation to a zero book value
over the life of its equipment. Machine X has a cost of $352,000,
annual cash outflows of $31,700, and a four-year life. Machine Y
costs $554,000, has annual cash outflows of $13,000, and has a
five-year life. Whichever machine is purchased will be replaced at
the end of...
Rowing Company is analyzing the replacement of one of its machines. The machine was purchased ten...
Rowing Company is analyzing the replacement of one of its
machines. The machine was purchased ten years ago at a cost of
$35,000 and has been depreciated to a book value of zero. If Rowing
replaces the machine, it will be able to bid on larger projects
that require the capabilities of the new machine. The new machine
will cost the firm $50,000, which will be depreciated over 4 years
according to the following depreciation rates: 30% in each of...
Rowing Company is analyzing the replacement of one of its machines. The machine was purchased ten...
Rowing Company is analyzing the replacement of one of its
machines. The machine was purchased ten years ago at a cost of
$35,000 and has been depreciated to a book value of zero. If Rowing
replaces the machine, it will be able to bid on larger projects
that require the capabilities of the new machine. The new machine
will cost the firm $50,000, which will be depreciated over 4 years
according to the following depreciation rates: 30% in each of...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Arlene is a ninth-grade student from a low-SES household. Though capable academically, she is not performing...
- Education. Post-secondary educational institutions in the United States (trade schools, colleges, universities, etc.) traditionally offer four...
- home / study / business / accounting / accounting questions and answers / background you are...
- Yasha swam in a pool the size of the NxM meters and was tired. At this...
- "Shareholders will always prefer a cash dividend to a share dividend while the company prefers the...
- Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products from buildings. There has...
- How does it impact of television/movies have cognitive, physical, and psychosocial development during middle childhood. Include...
ADVERTISEMENT