Question
Bramble Industries is considering the purchase of new equipment costing $1,430,000 to replace existing equipment that will be sold for $157,000. The new equipment is
Bramble Industries is considering the purchase of new equipment costing $1,430,000 to replace existing equipment that will be sold for $157,000. The new equipment is expected to have a $203,000 salvage value at the end of its 4-year life. During the period of its use, the equipment will allow the company to produce and sell an additional 34,800 units annually at a sales price of $30 per unit. Those units will have a variable cost of $14per unit. The company will also incur an additional $87,000 in annual fixed costs. Identify the amount and timing of all cash flows related to the acquisition of the new equipment. (Enter negative amounts using a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Cash Flow | Timing | Amount | ||
---|---|---|---|---|
Purchase of new equipment | Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Years 1-4 | $Enter a dollar amount Enter a dollar amount | ||
Salvage of old equipment | Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Years 1-4 | Enter a dollar amountEnter a dollar amount | ||
Sales revenue | Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Years 1-4 | Enter a dollar amountEnter a dollar amount | ||
Variable costs | Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Years 1-4 | Enter a dollar amountEnter a dollar amount | ||
Additional fixed costs | Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Years 1-4 | Enter a dollar amountEnter a dollar amount | ||
Salvage of new equipment | Select a period of timeSelect a period of time Years 1-4Year 2Year 3Year 4Year 1Year 0 | Enter a dollar amountEnter a dollar amount |
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