Compute the new machines net present value

Assignment Help Financial Accounting
Reference no: EM132493483

Point 1: 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 $100,000. The manufacturer estimates that the machine would be usable for 12 years, but would require the replacement of several key parts at the end of the sixth year. These parts would cause $6,200, including installation. After 12 years, the machine could be sold for about $5,000.

Point 2: The company estimates that the cost to operate the machine will be only $7,000 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 2,000 boxes of chocolates per year. The company realizes a contribution margin of $2.00 per box. A 20% rate of return is required on all investments.

REQUIRED

Question 1. What are the net cash inflows that will be provided by the new dipping machine?

Question 2. Compute the new machine's net present value using the incremental cost approach. (Round discount factor(s) to 3 decimal places.)

Reference no: EM132493483

Questions Cloud

Describe the concepts of interpersonal relationships : Please select four of the following concepts or theories. Positive reinforcement, negative reinforcement and punishment. Concepts of interpersonal relationships
Do include the unguaranteed residual value : Do you include the "unguaranteed" residual value when you arrive at PV of minimum lease payment or like the Lessee do we only use guaranteed??
Recommend an ideal solution : Recommend an ideal solution/criterion that they should rather use for comparing algorithms.
Design optimisation problems : Optimal sizing of a standalone Wind-PV-Battery-Diesel hybrid renewable energy system and Design optimisation of a flat finned heat exchanger
Compute the new machines net present value : Compute the new machine's net present value using the incremental cost approach. (Round discount factor(s) to 3 decimal places.)
Write a report to cfo on your findings regarding jack : Write a report to your CFO on your findings and recommendations regarding Jack. Jack Construction Supplies Ltd. (Jack) is a retail and commercial building
Give a c-program that shifts any number two places : Give a C-program that shifts any number two places to the right. Input should be an integer. Output should be the shifted result
Write the algorithm of bucket sort : Write the algorithm of Bucket Sort also find the time complexity of the Bucket Sort algorithm.
Describe the connections between privilege and religion : Post an explanation of the connections between privilege and religion. Describe a situation in which members of a religion experience privilege.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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