Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Expand Your Critical Thinking 25-01 a-d Swifty Company is considering the purchase of a new machine. Its invoice price is $93,000, freight charges are $3,800.

image text in transcribed
Expand Your Critical Thinking 25-01 a-d Swifty Company is considering the purchase of a new machine. Its invoice price is $93,000, freight charges are $3,800. Salvage value of the new machine is expected to be zero after a useful life of 4 years. Existing equipme machine is not purchased. At that time, the salvage value of the equipment would be zero. If the new machine i accountant, Lisa Hsung, has accumulated the following data regarding annual sales and expenses with and witho 1. Without the new machine, Swifty can sell 7.600 units of product annually at a per unit selling price of $100. I would increase by 25%, and the selling price would remain the same. 2. The new machine is faster than the old machine, and it is more efficient in its usage of materials. With the old rate will be 30% of sales with the new machine. (Note: These gross profit rates do not include depreciation on depreciation expense as a separate line item.) 3. Annual selling expenses are $122,000 with the current equipment. Because the new equipment would produce expected to increase by 10% if it is purchased. 4. Annual administrative expenses are expected to be $76,000 with the old machine, and $85,000 with the 5. The current book value of the existing machine is $30,000. Swifty uses straight-line depreciation. 6. Swifty's management has a required rate of retum of 15% on its investment and a cash payback period of no mor ma Answer the following. Ignore Income tax effects.) Calculate the annual rate of return for the new machine. (Round answer to 1 decimal place. 15.546.) Annual rate of retum hp 23 # 3 & 2 4 % 5 0) 7 B 8 W E Expand Your Critical Thinking 25-01 a-d Swifty Company is considering the purchase of a new machine. Its invoice price is $93,000, freight charges are $3,800. Salvage value of the new machine is expected to be zero after a useful life of 4 years. Existing equipme machine is not purchased. At that time, the salvage value of the equipment would be zero. If the new machine i accountant, Lisa Hsung, has accumulated the following data regarding annual sales and expenses with and witho 1. Without the new machine, Swifty can sell 7.600 units of product annually at a per unit selling price of $100. I would increase by 25%, and the selling price would remain the same. 2. The new machine is faster than the old machine, and it is more efficient in its usage of materials. With the old rate will be 30% of sales with the new machine. (Note: These gross profit rates do not include depreciation on depreciation expense as a separate line item.) 3. Annual selling expenses are $122,000 with the current equipment. Because the new equipment would produce expected to increase by 10% if it is purchased. 4. Annual administrative expenses are expected to be $76,000 with the old machine, and $85,000 with the 5. The current book value of the existing machine is $30,000. Swifty uses straight-line depreciation. 6. Swifty's management has a required rate of retum of 15% on its investment and a cash payback period of no mor ma Answer the following. Ignore Income tax effects.) Calculate the annual rate of return for the new machine. (Round answer to 1 decimal place. 15.546.) Annual rate of retum hp 23 # 3 & 2 4 % 5 0) 7 B 8 W E

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Auditing

Authors: William C. Boynton, Walter G. Kell

6th Edition

0471596876, 9780471596875

More Books

Students also viewed these Accounting questions

Question

What should Gail do now?

Answered: 1 week ago