Thanks ahead of time! I thumbs up correct answers!!
c Contents PROBLEM (CAPTTAL BUDGETING Noubeal Creations ls one of the leryest producers of ministure ships in a bottle. An especially complex part of one of the ships needs special production equipment thet is not useful for other preducts. The company punhased this equpment early 2013 for S200,000. It isnow oanr"2017, and the manager ofthe Model Shps DMsion, Je ney, S thi king abot Prhasing new-pnet to make thi m me e r et equipment will last for slx more years with zero disposal value at that time. It can be sold immedistely for $40,000. The following are last year's total manufacturing costs, when production was 8,000 ships Direct materials Diredt labor $29,600 28,400 12,400 36,000 $106,400 Total The cost of the new equlpment is $130,000. It has a six year useful tfe with an estimated dsposal vaue atthettime of $35,000. The sales representative selling the new equipment stated, "The new equipment will allow direct labor and varlable overhead to be reduced by a total of $1.95 per unit Fieley thinks this estimate is acourate, but aiso knows that a higher quality of direct material wil be necessary with the new equipment, cast g $0. 19 more per unt. Pod overhead costs will decrease by ,4,200. nney expects motion to be 8,550 ships in each of the next six years. Aasurme discount mte of 3%. REQUIRED 1. What is the difference in net present velues if Nautical Creations buys the new equpment instead of keeping their current equipment? c Contents PROBLEM (CAPTTAL BUDGETING Noubeal Creations ls one of the leryest producers of ministure ships in a bottle. An especially complex part of one of the ships needs special production equipment thet is not useful for other preducts. The company punhased this equpment early 2013 for S200,000. It isnow oanr"2017, and the manager ofthe Model Shps DMsion, Je ney, S thi king abot Prhasing new-pnet to make thi m me e r et equipment will last for slx more years with zero disposal value at that time. It can be sold immedistely for $40,000. The following are last year's total manufacturing costs, when production was 8,000 ships Direct materials Diredt labor $29,600 28,400 12,400 36,000 $106,400 Total The cost of the new equlpment is $130,000. It has a six year useful tfe with an estimated dsposal vaue atthettime of $35,000. The sales representative selling the new equipment stated, "The new equipment will allow direct labor and varlable overhead to be reduced by a total of $1.95 per unit Fieley thinks this estimate is acourate, but aiso knows that a higher quality of direct material wil be necessary with the new equipment, cast g $0. 19 more per unt. Pod overhead costs will decrease by ,4,200. nney expects motion to be 8,550 ships in each of the next six years. Aasurme discount mte of 3%. REQUIRED 1. What is the difference in net present velues if Nautical Creations buys the new equpment instead of keeping their current equipment
