Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Po One of X Company's production machines was badly damaged recently. Unfortunately, the machine was purchased just two years earlier for $40,000. The company must

image text in transcribed
image text in transcribed
Po One of X Company's production machines was badly damaged recently. Unfortunately, the machine was purchased just two years earlier for $40,000. The company must there the machine or purchase a new machine. The estimated cost of repairing the machine is 522,000, after which operating costs will be $62,000 year. It will also require a maintenance check in the third year that is stimated to cont $2,500 A new machine will com $81,000, but it will be more efficient than the repaired machine with annual operating cost savings $11,000 Both the repaired machine and the new machine wit tant for dix years, which time the repaired one would be wortes, and new one will be worth 50,000 per mettere be sold mediately for $6,000 Assuming a discount rate of what is the nat present value of repairing the damaged machine instead of buying the new machine (e present valuable in the Submit Aww Tries 0/5 One of Company's production machines was badly damaged recently. Unfortunately, the machine was purchased just two years earlier for $40,000. The company must the rear the machine purchase a new machine. The estimated cost of repairing the machine is $22.000, after which operating costs will be $62,000 a year it will also require a maintenance check in the third year that is stated to con $2,500 A new machine will cost 1,000, but it will be more efficient than the repaired machine, with annual operating cost savings of $11,000 Both the repaired machine and the machine will last for six years, at which time the repaired one would be worthless, and new one would be worth 16,000. If it is not read the damage machine can be sold immediately for $6,000 Assuming account rate of what is the net present value of repairing the damaged machine stead of buying the new machine the present valuable in the Church Sumner Tries 0/5

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_2

Step: 3

blur-text-image_3

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

Knowledge Audit A Complete Guide

Authors: The Art Of Service - Knowledge Audit Publishing

2021 Edition

1867424010, 978-1867424017

More Books

Students also viewed these Accounting questions