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Charlie Corporation is considering buying a new donut maker. This machine will replace an old donut maker that still has a useful life of 6
Charlie Corporation is considering buying a new donut maker. This machine will replace an old donut maker that still has a useful life of 6 years. The new machine will cost $3,750 a year to operate, as opposed to the old machine, which costs $4,175 per year to operate. Also, because of increased capacity an additional 21500 donuts a year can be produced. The company makes a contribution margin of $0.10 per donut. The old machine can be sold for $8.500 and the new machine costs $31,500. The incremental annual net cash inflows provided by the new machine would be ignore income taxes): $2,150 $6,350 () $425 $2,575
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