Please help. How can I solve this on excel? D311234567891011123132342338X13141516 Torreo coffee roaster's machine replacement17 Nominal discount rate18 Inflation Rate19 Real discount rate20 Corporate tax2122 New machine23 Machine's cost24 Life span25 Additional revenue26 Additional costs27 Machine's disposal Value28 Nominal Depreciation29 Machine real salvage value30353637fxABGTorreo Coffee Roaster is considering replacing one of its existing machines with a new one. Torreo bought the old one 4 years ago for$87,500. It is being depreciated on a SL basis over a 14-year life. The machine could be sold today 1/1/2000, for $20,000.The new machine costs $95,000. It has a 10-year depreciable life with salvage value of $13,000 in real terms. However, based on the taxlaw, the asset will be depreciated to 0 over 10 years using a SL method.In 1999 Torreo's current coffee machine accounted for annual revenue of $50,000 and has annual costs of $25,000. The new machine willincrease revenue to $65,000 per year (in real terms, that is, in 1999 dollars). The machine will also increase operating costs by $3,000 in realterms.The nominal discount rate is 14% per annum. The corporate tax rate is 40%. The annual anticipated inflation rate is 5%. All cash flowsoccur at the end of year. Taxes are also paid at the end of year. Should Torreo replace the old machine with the new one?14%5%40%95,0001015,0003,00009,50013,000#N/AOld machineMachine's costLife span# of years since purchaseDepreciation old machineB.V. old machine"Market value old machine87,500.0014.004.006,250.00H20,000

When a firm decides to replace an old capital asset with a new one, it performs a replacement…

Answered: 1 Torreo Coffee Roaster is considering…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.2.2P: Differential analysis report for machine replacement proposal Catalina Tooling Company is...

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On September 10, 2020, Vaughn Manufacturing incurred the following costs for one of its printing presses: Purchase of attachment $58500 Installation of attachment 5400 Replacement parts for renovation of press 15200 Labor and overhead in connection with renovation of press 6500 Neither the attachment nor the renovation increased the estimated useful life of the press. However, the renovation resulted in significantly increased productivity. What amount of the costs should be capitalized? $85600. $0 $79100. $70400.
Assume that a company is choosing between two alternatives-keep an existing machine or replace it with a new machine. The costs associated with the two alternatives are summarized as follows: Purchase cost (new) Remaining book value Overhaul needed now Existing Machine $ 15,000 $ 6,000 $ 5,000 New Machine $ 22,000 Annual cash operating costs Salvage value (now) Salvage value (eight years from now) $6,000 Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. If the company overhauls its existing machine, it will be usable for eight more years. If it buys the new machine, it will be used for eight years. Assuming a discount rate of 13%, what is the net present value of the cash flows associated with keeping the existing machine? $ 10,500 $ 2,000 $1,000 $ 7,000
Replacement project example: Suppose Mayco wants to replace an existing printer with a new high-speed copier. The existing printer was purchased 13 years ago at a cost of $16,000. The printer is being depreciated using straight line basis assuming a useful life of 18 years and no salvage value. If the existing printer is not replaced, it will have zero market value at the end of its useful life. The new high-speed copier can be purchased for $23,000 (including freight and installation). Over its 5-year life, it will reduce labor and raw materials usage sufficiently to cut annual operating costs from $18,000 to $9,000. This reduction in costs will cause before-tax profits to rise by an equal amount. It is estimated that the new copier can be sold for $2,400 at the end of five years; this is its estimated salvage value. The old printer's current market value is $4,576. If the new copier is acquired, the old printer will be sold to another company. The company's marginal…
Replacement project example: Suppose Mayco wants to replace an existing printer with a new high-speed copier. The existing printer was purchased 13 years ago at a cost of $16,000. The printer is being depreciated using straight line basis assuming a useful life of 18 years and no salvage value. If the existing printer is not replaced, it will have zero market value at the end of its useful life. The new high-speed copier can be purchased for $23,000 (including freight and installation). Over its 5-year life, it will reduce labor and raw materials usage sufficiently to cut annual operating costs from $18,000 to $9,000. This reduction in costs will cause before-tax profits to rise by an equal amount. It is estimated that the new copier can be sold for $2,400 at the end of five years; this is its estimated salvage value. The old printer's current market value is $4,576. If the new copier is acquired, the old printer will be sold to another company. The company's marginal…
Hi please give me instruction on this question cant figure out.. Differential Analysis for Machine Replacement Taipei Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $77,400, the accumulated depreciation is $31,000, its remaining useful life is five years, and its residual value is negligible. On September 27, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $161,000. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on present and proposed operations: Present Operations Proposed Operations Sales $245,400 $245,400 Direct materials 83,600 83,600 Direct labor 58,100 — Power and maintenance 5,400 28,600 Taxes, insurance, etc. 1,900 6,400…
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Differential analysis report for machine replacement proposal Catalina Tooling Company is considering replacing a machine that has been used in its factory for two years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows: Annual nonmanufacturing operating expenses and revenue are not expected to be affected by the purchase of the new machine. Instructions List other factors that should be considered before a final decision is reached.
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Answer the following question A truck costing $102,500 and uninsured is wrecked on its first day in use. It can be either (a) disposed of for $17,000 cash and replaced with a similar truck costing $104,000 or (b) rebuilt for $82,000, and, thus, be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations. A truck costing $102,500 and uninsured is wrecked on its first day in use. It can be either (a) disposed of for $17,000 cash and replaced with a similar truck costing $104,000 or (b) rebuilt for $82,000, and, thus, be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations. (Only complete the necessary answer boxes.) (a) (b) Replace Rebuild Deduct Total cost Action V is less costly by $.
Please solve this MCQs Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $464,000 or a new model 220 machine costing $405,000 to replace a machine that was purchased 10 years ago for $439,000. The old machine was used to make product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.Management has decided to buy the new model 220 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product I43L.Management also considered, but rejected, the alternative of simply dropping product I43L. If that were done, instead of investing $340,000 in the new machine, the money could be invested in a project that would return a total of $456,000.In making the decision to buy the model 220 machine rather than the model 370 machine, the sunk cost was: $456,000 $464,000 $439,000 $405,000

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