Question
In: Accounting
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $62,000....
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $62,000. The machine would replace an old piece of equipment that costs $16,000 per year to operate. The new machine would cost $7,000 per year to operate. The old machine currently in use is fully depreciated and could be sold now for a salvage value of $23,000. The new machine would have a useful life of 10 years with no salvage value. Required: 1. What is the annual depreciation expense associated with the new bottling machine? 2. What is the annual incremental net operating income provided by the new bottling machine? 3. What is the amount of the initial investment associated with this project that should be used for calculating the simple rate of return? 4. What is the simple rate of return on the new bottling machine? (Round your answer to 1 decimal place i.e. 0.123 should be considered as 12.3%.)
Solutions
ekkarill92 answered 1 year agoRelated Solutions
The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for $71,000....
The management of Ballard MicroBrew is considering the purchase
of an automated bottling machine for $71,000. The machine would
replace an old piece of equipment that costs $18,000 per year to
operate. The new machine would cost $8,000 per year to operate. The
old machine currently in use is fully depreciated and could be sold
now for a salvage value of $26,000. The new machine would have a
useful life of 10 years with no salvage value.
Required:
1. What...
Chapter 12 Question 3: The management of Ballard MicroBrew is considering the purchase of an automated...
Chapter 12 Question 3:
The management of Ballard MicroBrew is considering the purchase
of an automated bottling machine for $50,000. The machine would
replace an old piece of equipment that costs $13,000 per year to
operate. The new machine would cost $6,000 per year to operate. The
old machine currently in use could be sold now for a salvage value
of $20,000. The new machine would have a useful life of 10 years
with no salvage value.
Required:
1. What...
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Caine Bottling Corporation is considering the purchase of a new
bottling machine. The machine would cost $228,168 and has an
estimated useful life of 8 years with zero salvage value.
Management estimates that the new bottling machine will provide net
annual cash flows of $33,500. Management also believes that the new
bottling machine will save the company money because it is expected
to be more reliable than other machines, and thus will reduce
downtime. Assume a discount rate of 5%....
Michener Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost...
Michener Bottling Corporation is considering the purchase of a
new bottling machine. The machine would cost $170,000 and has an
estimated useful life of eight years with zero salvage value.
Management estimates that the new bottling machine will provide net
annual cash flows of $31,000. Management also believes that the new
machine will save the company money because it is expected to be
more reliable than other machines, and thus will reduce downtime.
Assume a discount rate of 10%. Click...
The ABC Corporation is considering the purchase of a new bottling machine for its wine bottling...
The ABC Corporation is considering the purchase of a new
bottling machine for its wine bottling line. The bottling machine
will cost $30,500. The maintenance and operating costs will amount
to $1,300 for the first year. The maintenance and operating costs
can be expected to increase $3,000 for each year that the bottling
machine is used. The salvage value of the bottling machine, at any
time that it is removed from service, will be the bottling
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Fine Corp. is considering the purchase of a new bottling machine for $50,000. The machine is...
Fine Corp. is considering the purchase of a new bottling machine
for $50,000. The machine is expected to increase production,
resulting in $24,500 new sales per year. The cost to operate the
machine is $5,500. The machine will be depreciated on a
straight-line basis to $0 over 10 years. The project will require a
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bottling machine for $72,000. It is expected to have a useful life
of 4 years with no terminal disposal value. The plant manager
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machine for$28,000.It is expected to have a useful life of 4 years
with no terminal disposal value. The plant manager estimates the
following savings in cash operating costs:
Year
Amount
1
$12,000
2
10,000
3
9,000
4
8,000
Total
$39,000
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1.
Net present value
2.
Payback period
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Discounted payback period
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Internal rate of return (using the interpolation method)
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for an approximate answer but calculate your final answer using the
formula and financial calculator methods.
Year
Cash Flow
1
$
21,000
2
24,000
3
28,000
4
14,000
5
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a. If the cost of...
The Pan American Bottling Co. is considering the purchase of a new machine that would increase...
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formula and financial calculator methods.
Year
Cash Flow
1
$
20,000
2
25,000
3
26,000
4
30,000
5
15,000
a. If the cost of...
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