Question

Swifty Corporation is contemplating the replacement of an old machine with a new one. The following...

Swifty Corporation is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $312000 $640000 Accumulated Depreciation 93600 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $249600 $187200 If the old machine is replaced, it can be sold for $28000. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) of replacing the old machine is

$12000
$34400
$62400
$328000
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Sheffield Corp. is contemplating the replacement of an old machine with a new one. The following...
Sheffield Corp. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $440000 $880000 Accumulated Depreciation 132000 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $355000 $264000 If the old machine is replaced, it can be sold for $35200. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) of replacing...
21. Shamrock is considering the replacement of a piece of equipment with a newer model. The...
21. Shamrock is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price $252000 $420000 Accumulated depreciation 100800 - 0 - Annual operating costs 336000 268800 If the old equipment is replaced now, it can be sold for $67200. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years. For this question only, assume that six months ago Chung’s equipment...
Marigold Corp. is considering the replacement of a piece of equipment with a newer model. The...
Marigold Corp. is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price $132000 $224000 Accumulated depreciation 52800 - 0 - Annual operating costs 156000 156000 If the old equipment is replaced now, it can be sold for $36400. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for...
Sunland Company is considering the replacement of a piece of equipment with a newer model. The...
Sunland Company is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment New Equipment Purchase price $312000 $512000 Accumulated depreciation 124800 - 0 - Annual operating costs 411000 354000 If the old equipment is replaced now, it can be sold for $85000. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for...
The Hot Air Company is contemplating the replacement of its old printing machine with a new...
The Hot Air Company is contemplating the replacement of its old printing machine with a new model costing $60,000. The old machine which originally cost $40,000 has 6 years of expected life remaining and a current book value of $30,000 versus a current market (salvage) value of 20,000.Target’s corporate tax rate is 40%. If Target sells the old machine at market value, what is the initial after tax outlay for the new printing machine? -$22,180 -$33,600 -$36,000 -$17,050 -$30,000 -$40,000
The Stargate Company is contemplating the replacement of its old space-time machine with a new model...
The Stargate Company is contemplating the replacement of its old space-time machine with a new model costing $420,000. The old machine, which originally cost $500,000, has 5 years of expected life remaining and a current book value of $100,000 versus a current market value of $200,000. Stargate's corporate tax rate is 40 percent. If Stargate sells the old machine at market value, what is the initial after-tax outlay for the new space-time machine?
A company is considering replacing an old machine with a new one. The old machine is...
A company is considering replacing an old machine with a new one. The old machine is completely depreciated and can be sold for $100,000 in the market. The company intends to sell this machine if it is replaced. The new machine costs $400,000. The replacement of the machine will require an increase in the inventories by $200,000 in addition, accounts receivables will increase by $75,000. The new machine is going to be depreciated over 3 years to 0 salvage value....
The Bigbee Bottling Company is contemplating the replacement of one of its bottling machines with a...
The Bigbee Bottling Company is contemplating the replacement of one of its bottling machines with a newer and more efficient one. The old machine has a book value of $575,000 and a remaining useful life of 5 years. The firm does not expect to realize any return from scrapping the old machine in 5 years, but it can sell it now to another firm in the industry for $235,000. The old machine is being depreciated by $115,000 per year, using...
ABC Co. is considering replacing a machine. The original cost of the old machine currently in...
ABC Co. is considering replacing a machine. The original cost of the old machine currently in use is $10,000 (with accumulated depreciation of $8,000) while the purchase price of the contemplated new machine is $20,000. Annual operating costs for the current machine is $7,000/ year and estimated to be $2,600/ year for the new machine. Both machines will have an estimated remaining useful of 5 years. If sold now, the current machine would have a salvage value of $1,000 while...
St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new...
St. Johns River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before depreciation from $30,000 to $56,000 per year. The new machine will cost $90,000, and it will have an estimated life of 8 years and no salvage value. The new riveting machine is eligible for 100% bonus depreciation at the time of purchase. The applicable corporate tax rate is 25%, and the firm's WACC is 10%. The old machine...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT