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Bridgeport Vita produces a wide range of herbal supplements sold nationwide through independent distributors. In response to an increasing demand for its products, the company
Bridgeport Vita produces a wide range of herbal supplements sold nationwide through independent distributors. In response to an increasing demand for its products, the company is considering the purchase of a new packaging machine to replace the seven-year-old machine currently in use. The new machine will cost $152,550, and installation will require an additional $2,775. The machine has a useful life of 10 years and is expected to have a salvage value of $4,395 at that time. The variable Cost to operate the new machine is $8.95 per carton compared to the current machine's variable cost of $9.02 per carton, and Bridgeport Vita expects to pack 238,000 cartons each year. If the new machine is purchased, Bridgeport Vita will avoid a required $9,175 overhaul of the current machine in four years. The current machine has a market value of $11.725. Identify the amount and timing of all cash flows related to the acquisition of the new packaging machine. (Enter negative amounts using a negative sign preceding the number eg 45 or parentheses e.g. (45).] Cash Flow Timing Amount Purchase price Installation Salvage of old equipment Salvage of new equipment Variable cost savings Avoided overhaul e Textbook and Media Year o Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Years 1-10 Save for later Attempts: 0 of 12 used Submit Answer
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