Indigo Company is considering the purchase of a new machine. The invoice price of the...
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Accounting
Indigo Company is considering the purchase of a new machine. The invoice price of the machine is $165,000, freight charges are estimated to be $5,000, and installation costs are expected to be $7,000. The salvage value of the new equipment is expected to be zero after a useful life of 5 years. The company could retain the existing equipment and use it for an additional 5 years if it doesn't purchase the new machine. At that time, the equipment's salvage value would be zero. If Indigo purchases the new machine now, it would have to scrap the existing machine. Indigo's accountant, Laura Hall, has accumulated the following data for annual sales and expenses, with and without the new machine: Without
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