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Marigold Vita produces a wide range of herbal supplements sold nationwide through independent distributors. In response to an increasing demand for its products, the company
Marigold 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 $160,050, and installation will require an additional $2,925. The machine has a useful life of 10 years and is expected to have a salvage value of $4.185 at that time. The variable cost to operate the new machine is $9.85 per carton compared to the current machine's variable cost of $9.90 per carton, and Marigold Vita expects to pack 244,000 cartons each year. If the new machine is purchased, Marigold Vita will avoid a required $9,925 overhaul of the current machine in four years. The current machine has a market value of $12.175. 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 eg.-45 or parentheses es (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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