Question
Cranes manufacturing is considering the purchase of new equipment that costs $615,000 to replace equipment that is old and inefficient. Crane has found a buyer
Cranes manufacturing is considering the purchase of new equipment that costs $615,000 to replace equipment that is old and inefficient. Crane has found a buyer for the old equipment who will pay $6,560 for it. The new equipment is expected to produce $9,840 of additional revenue each year but will result in additional maintenance cost of $1,640. The new equipment will have a salvage of $8,200 and will be depreciated over 10 years. Identify the amount and timing of the cash flows relevant to Cranes decision to purchase the new equipment. (Round answers to 0 decimal places, e.g. 25,000.)
Cash Flow | Time Period | |||
---|---|---|---|---|
Purchase price of new equipment | $enter a dollar amount | select a time period 101-100 | ||
Additional revenue | enter a dollar amount | select a time period 101-100 | ||
Additional maintenance cost | enter a dollar amount | select a time period 1001-10 | ||
Selling price of old equipment | enter a dollar amount | select a time period 101-100 | ||
Salvage value of equipment |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started