Question
Blossom Inc. manufactures snowsuits. Blossom is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased 5
Blossom Inc. manufactures snowsuits. Blossom is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased 5 years ago at a price of $1.8 million; six months ago, Blossom spent $55,000 to keep it operational. The existing sewing machine can be sold today for $243,255. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7: Year 1 $390,900 2 399,900 3 410,400 4 425,200 5 432,600 6 435,300 7 437,700 The new sewing machine would be depreciated according to the declining-balance method at a rate of 20%. The salvage value is expected to be $379.700. This new equipment would require maintenance costs of $98.400 at the end of the fifth year. The cost of 5:12 P
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