New machine net present value

Assignment Help Accounting Basics
Reference no: EM13135324

The Sweetwater Candy Company would like to buy a new machine that would automatically "dip" chocolates. The dipping operation is currently done largely by hand. The machine the company is considering costs $84,000. The manufacturer estimates that the machine would be usable for seven years but would require the replacement of several key parts at the end of the third year. These parts would cost $7,200, including installation. After seven years, the machine could be sold for $6,600

The company estimates that the cost to operate the machine will be $10,000 per year. The present method of dipping chocolates costs $30,000 per year. In addition to reducing costs, the new machine will increase production by 6,000 boxes of chocolates per year. The company realizes a contribution margin of $0.5 per box. A 15% rate of return is required on all investments. (Ignore income taxes.)

What are the annual net cash inflows that will be provided by the new dipping machine?

Compute the new machine's net present value. Use the incremental cost approach.

Reference no: EM13135324

Questions Cloud

Outside basis of partner : What is each partner's outside basis and how much gain (loss) must the partners recognize in 20X9 when Picture Perfect was formed?
Carryover basis in an asset : Partnership will take a carryover basis in an asset it acquires when: a. The partnership acquires the asset through a § 1031 like-kind exchange. b. A partner owning 25% of partnership capital and profits sells the asset to the partnership.
Calculate the restated cash dividend per share : Calculate the restated cash dividend per share for 2009 reported in the 2011 annual report for comparative purposes. Round your answer to two decimal places.
Currently for the estimated cost : In its 2004 annual report, Apple Computer reported the following in one of its disclosure notes: "Warranty Expense: The Company provides currently for the estimated cost for product warranties at the time the related revenue is recognized."
New machine net present value : What are the annual net cash inflows that will be provided by the new dipping machine? Compute the new machine's net present value. Use the incremental cost approach.
Determine the temperature at which the liquid : A rigid tank with a volum of 2.5m^3 contains 5kg of saturated liquid-vapor mixture of water at 75deg C. Now the water is slowly heated. Determine the temperature at which the liquid in the tank is completely vaporized
W rhodes and associates : You are a graduate accountant working for W Rhodes and Associates a public accounting firm situated at 556677 George Street, Victoria.
Heat is transferred to the steam until the temperature : A piston-cylinder device has a volume of 0.1 cubic meters and contains 0.5kg of steam at 0.4 MPa. Heat is transferred to the steam until the temperature is 300 degrees Celsius
Determine the latent heat of vaporization of the water vapor : How would you calculate the sensible heat, the latent heat, and determine the latent heat of vaporization of the water vapor in this air stream as the air is cooled from 170 F to 48 F?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Determining the tax issues

Dave, who is in poor health, already owns about $3 million of property. What tax issues should Dave James consider with respect to the property bequested to him by his wife?

  Trade controls-tariffs-subsidies

Describe the following trade controls: Tariffs, subsidies, and quotas. How do these trade controls affect relationship of trading partners and what is their value in international business.

  Net cash outflows from investing activities

In its statement of cash flows, Peridot should report net cash outflows from investing activities of:

  Exposure to exchange rate risk

A U.S. firm has a Canadian subsidiary that remits some of its earnings to the parent on an annual basis. The firm has no other foreign business. The firm could best reduce its exposure to exchange rate risk by issuing bonds denominated in:

  Depreciation expense using straight-line method

Mendenhall Corporation constructed a building at a cost of $10,000,000. Average accumulated expenditures were $4,000,000, actual interest was $800,000, and the usefull life is 40 years, depreciation expense for the first full year using the straig..

  Loss on the income statement

Betty's Bunny Barn has experienced a $40,000 loss due to tornado damage to their inventory. Tornados have never before occurred in this area. Assuming that the company's tax rate is 30%, what amount will be reported for this loss on the income sta..

  Differences between planned and actual results

Under management by exception, which differences between planned and actual results should be investigated?

  Prepare baileys journal entry to correct depreciation

In 2010, Bailey Corporation discovered that equipment purchased on January 1, 2008, for $50,000 was expensed at that time. The equipment should have been depreciated over 5 years, with no salvage value. The effective tax rate is 30%.

  Reporting net income for the amount

Cindy reported net income of $40,000 during 2003 and paid dividends of $20,000. Penny should report net income for 2003 in the amount of:

  Finding corporate strategy from annual reports

Review an annual report of a popular company ie. Target, Kohl's Bass Pro shops, and answer the following questions with references:

  Calculation of earnings per share for financial plans

Determine for each plan the earnings per share of common stock, assuming that the income before bond interest and income tax is $2,600,000. Discuss the advantages and disadvantages of each plan.

  Issues or problems when determine the actual cost

Explain three issues or problems which a company could face when trying to find out the actual cost of the good or service which is to be used in the cost of goods sold.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd