ASAP please 1. In capital budgeting, should the following be ignored, or rather added or subtracted from the...

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Finance

ASAP please
1. In capital budgeting, should the following beignored, or rather added or subtracted from the new machine’spurchase price when estimating initial cash out?ow? When estimatingthe machine’s depreciable basis?
a. The market value of the old machine is $500, the old machinehas a remaining useful life, and the investment is a replacementdecision.
b. An additional investment in inventory of $2,000 isrequired.
c. $200 is required to ship the new machine to the plantsite.
d. A concrete foundation for the new machine will cost $250.
e. Training of the machine operator will cost $300.
2. What is the purpose of requiring more levels of managementapproval, the larger the proposed capital expenditure? Is moreinformation also required in support of the request?

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4.2 Ratings (758 Votes)

As per rules I am answering the first 4 subparts of the question 1a the market value of the old machinery is the opportunity cost and needs to be considered in the initial cash flow However it will not be added to the cost of new machinery because it does See Answer

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ASAP please1. In capital budgeting, should the following beignored, or rather added or subtracted from the new machine’spurchase price when estimating initial cash out?ow? When estimatingthe machine’s depreciable basis?a. The market value of the old machine is $500, the old machinehas a remaining useful life, and the investment is a replacementdecision.b. An additional investment in inventory of $2,000 isrequired.c. $200 is required to ship the new machine to the plantsite.d. A concrete foundation for the new machine will cost $250.e. Training of the machine operator will cost $300.2. What is the purpose of requiring more levels of managementapproval, the larger the proposed capital expenditure? Is moreinformation also required in support of the request?