8-26. The S & A Company manufactures a variety of automobile parts under contracts with several auto companies. It has been proposed that it produce a new part using the unused capacity in its machine shop and two new machines. These are general-purpose machines that can be used in the manufacture of several different parts. Their economic life is estimated to be 10 years. The installed first cost of the new machines will be $35,000, and the estimated salvage value will be $4,750. han vill he exhausted in 8-26. The S & A Company manufactures a variety of automobile parts under contracts with several auto companies. It has been proposed that it produce a new part using the unused capacity in its machine shop and two new machines. These are general-purpose machines that can be used in the manufacture of several different parts. Their economic life is estimated to be 10 years. The installed first cost of the new machines will be $35,000, and the estimated salvage value will be $4,750. It is estimated that the excess capacity in the machine shop will be exhausted in years and at that time three additional machines will need to be purchased at a cost of $50,000 to maintain the production schedule for this part. These machines will also have an economic life of 10 years and an estimated salvage value of $6,000. All the machines will be depreciated over 10 years. Prepare a table showing the before-tax cash flow for this project and the depreciation charges for each of the next 10 years using the straight-line method. the nonosed project will produce a 4 8-26. The S & A Company manufactures a variety of automobile parts under contracts with several auto companies. It has been proposed that it produce a new part using the unused capacity in its machine shop and two new machines. These are general-purpose machines that can be used in the manufacture of several different parts. Their economic life is estimated to be 10 years. The installed first cost of the new machines will be $35,000, and the estimated salvage value will be $4,750. han vill he exhausted in 8-26. The S & A Company manufactures a variety of automobile parts under contracts with several auto companies. It has been proposed that it produce a new part using the unused capacity in its machine shop and two new machines. These are general-purpose machines that can be used in the manufacture of several different parts. Their economic life is estimated to be 10 years. The installed first cost of the new machines will be $35,000, and the estimated salvage value will be $4,750. It is estimated that the excess capacity in the machine shop will be exhausted in years and at that time three additional machines will need to be purchased at a cost of $50,000 to maintain the production schedule for this part. These machines will also have an economic life of 10 years and an estimated salvage value of $6,000. All the machines will be depreciated over 10 years. Prepare a table showing the before-tax cash flow for this project and the depreciation charges for each of the next 10 years using the straight-line method. the nonosed project will produce a 4
