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Can I recieve help with amount of purchase price, installation, and avoided overhaul? Bramble Vita produces a wide range of herbal supplements sold nationwide through
Can I recieve help with amount of purchase price, installation, and avoided overhaul?
Bramble 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 $176,300, and installation will require an additional $3,275. The machine has a useful life of 10 years and is expected to have a salvage value of $3,730 at that time. The variable cost to operate the new machine is $11.80 per carton compared to the current machine's variable cost of $11.90 per carton, and Bramble Vita expects to pack 258,000 cartons each year. If the new machine is purchased, Bramble Vita will avoid a required $11,550 overhaul of the current machine in four years. The current machine has a market value of $13,150. 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 eg.(45).) Cash Flow Timing Amount Purchase price Year o $ $ 176300 Installation Year o 3275 Salvage of old equipment Year o 13150 Salvage of new equipment Year 10 3730 25800 Variable cost savings Years 1-10 Avoided overhaul Year 4 11500Step by Step Solution
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