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Exercise 9-2 Bramble Vita produces a wide range of herbal supplements sold nationwide through independent distributors. In response to an increasing demand for its products,
Exercise 9-2 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 $151,300, and installation will require an additional $2,750. The machine has a useful life of 10 years and is expected to have a salvage value of $4,430 at that time. The variable cost to operate the new machine is $8.80 per carton compared to the current machine's variable cost of $8.86 per carton, and Bramble Vita expects to pack 237,000 cartons each year. If the new machine is purchased, Bramble Vita Will avoid a required $9,050 overhaul of the current machine in four years. The current machine has a market value of $11,650. 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 e.g.-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
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