Pronghorn 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 $166,300, and installation will require an additional $3,075 The machine has a useful life of 10 years and is expected to have a salvage value of $4,010 at that time The variable cost to operate the new machine is $10 60 per carton compared to the current machines variable cost of $10 70 per carton, and Pronghorn Vita expects to pack 249,000 cartons each year If the new machine is purchased, Pronghorn Vita will avoid a required $10,550 overhaul of the current machine in four years The current machine has a market value of $12,550 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 Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1 10 $Enter a dollar amount Enter a dollar amount Installation Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1 10 Enter a dollar amountEnter a dollar amount Salvage of old equipment Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1 10 Enter a dollar amountEnter a dollar amount Salvage of new equipment Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1 10 Enter a dollar amountEnter a dollar amount Variable cost savings Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1 10 Enter a dollar amountEnter a dollar amount Avoided overhaul Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1 10 Enter a dollar amountEnter a dollar amount

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 13, 2024

Pronghorn Vita produces a wide range of herbal supplements sold nationwide through independent distributors. In response to an increasing demand for its products, the company

Pronghorn 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 $166,300, and installation will require an additional $3,075. The machine has a useful life of 10 years and is expected to have a salvage value of $4,010 at that time. The variable cost to operate the new machine is $10.60 per carton compared to the current machines variable cost of $10.70 per carton, and Pronghorn Vita expects to pack 249,000 cartons each year. If the new machine is purchased, Pronghorn Vita will avoid a required $10,550 overhaul of the current machine in four years. The current machine has a market value of $12,550. 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	Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1-10	$Enter a dollar amount Enter a dollar amount
Installation	Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1-10	Enter a dollar amountEnter a dollar amount
Salvage of old equipment	Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1-10	Enter a dollar amountEnter a dollar amount
Salvage of new equipment	Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1-10	Enter a dollar amountEnter a dollar amount
Variable cost savings	Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1-10	Enter a dollar amountEnter a dollar amount
Avoided overhaul	Select a period of timeSelect a period of time Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Years 1-10	Enter a dollar amountEnter a dollar amount