Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. assume that a company is choosing between two alte

Assume that a company is choosing between two alternativeskeep an existing machine or replace it...

70.2K

Verified Solution

Question

Accounting

Assume that a company is choosing between two alternativeskeep an existing machine or replace it with a new machine. The costs associated with the two alternatives are summarized as follows:

Existing Machine New Machine
Purchase cost (new) $ 15,000 $ 22,000
Remaining book value $ 6,000
Overhaul needed now $ 5,000
Annual cash operating costs $ 11,000 $ 7,000
Salvage value (now) $ 2,000
Salvage value (eight years from now) $ 1,000 $ 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 19%, what is the net present value of the cash flows associated with replacing the existing machine with a new machine?

Multiple Choice

$(54,184)

$(48,184)

$(46,184)

$(50,184)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Algebra
1.2K views

2 Which of the answer choices below makes both equations in the system tru a...

Biology
1.2K views

ences exp why you chose this teacher It s my PE teacher please put something...

Physics
1.2K views

PARAGRAPH Relation b w friction and applied force for a block of mass 2 kg...

Calculus
1.2K views

Let f(x) = log3(x-4).a. Use transformations to graph the function.b. Write the domain and range...

Algebra
1.2K views

Eigenvalues of the matrix with the quadratic form x 4x1x2 x2 2x 4x2 5 equals...

Algebra
1.2K views

4 cos x y cosy sin x y siny cosx

Accounting
1.2K views

all parts or dont answer thank you b. Using...

Accounting
1.2K views

Covid Company purchased treasury shares with a cost of $25,000 during 2019. During the year,...

Accounting
1.2K views

Briefly discuss the Audit Procedures for Testing Database Access Controls.

Accounting
1.2K views

Comprehensive Accounting Cycle Review 5-02 (Part Level Submission) On November 1, 2022, Metlock had the...

Accounting
1.2K views

Yuwwell Corporation's direct labor budget for next year contained the following information: The company uses...

Accounting
1.2K views

L&M Manufacturing produces a single product that sells for $16. Variable (flexible) costs per unit...