Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hillsong Inc manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years

image text in transcribed
image text in transcribed
Hillsong Inc manufactures snowsuits. Hillsong is considering purchasing a new sewing machine at a cost of $2.45 million. Its existing machine was purchased five years ago at a price of $1.8 million, six months ago, Hillsong spent $55,000 to keep it operational the existing sewing machine can be sold today for $243,257. The new sewing machine would require a one-time, $85,000 training cost. Operating costs would decrease by the following amounts for years 1 to 7 : The new sewing machine would be depreclated according to the declining balance method at a rate of 20k the salvage valje is expected to be $379.700. This new equ pment would require maintenance costs of $98.400 at the end of the fifthysar. The cost of capital is 9% Use the net present value method to determine the following- (If net present value is negative then enter with negative sign preceding the number es. -45 or parentheses es. (45). Round present valuc answer to 0 dedimal places, es. 125. For calaulation purposes use 5 decimal places as displayed in the foctor table provided) Calculate the net present value. Net present value $ Determine whether Hillsong should purchase the new machine to replace the edsting machine

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

Brinks Modern Internal Auditing A Common Body Of Knowledge

Authors: Robert R. Moeller

7th Edition

0470293039, 978-0470293034

More Books

Students also viewed these Accounting questions

Question

Describe the appropriate use of supplementary parts of a letter.

Answered: 1 week ago