Delaney Company is considering replacing equipment which originally cost $508,000 and which has $355,600 accumulated depreciation to date. A new machine will cost $727,000. What is the sunk cost in this situation? a.$152,400 b.$574,600 c.$508,000 d.$121,920
Q: Delaney Company is considering replacing equipment that originally cost $518,000 and that has…
A: Sunk cost refers to the cost or money which is already expended and irrecoverable in nature.
Q: A company is considering purchasing factory equipment that costs $480,000 and is estimated to have…
A: Annual Operating Income = Annual revenues - Operating Expenses - Depreciation = $135000 - $39000 -…
Q: Delaney Company is considering replacing equipment that originally cost $600,000 and has accumulated…
A: Formula: Sunk cost = Equipment original cost - accumulated depreciation
Q: A machine costs RO 40,000 with a salvage value of RO 20,000. The expected life of the machine is…
A: Under units of production method, depreciation is calculated on the basis of units produced during…
Q: ABC Corp is considering replacing equipment that originally cost $600,000 and has accumulated…
A: sunk cost: formula =originally cost - accumulated depreciation - Amount Recovered on sale
Q: Two alternative machines are being considered for a manufacturing process. Machine A has an initial…
A: Calculation of present values of both machines: Answer: Present worth of machine A is -$101,157.14…
Q: $(15300)
A: Old equipment new equipment Difference Purchase price $382500 - $382500 Sales value -…
Q: Vernon Company is considering the replacement of some of its manufacturing equipment. Information…
A: Relevant cost refers to a cost that is related to a specific management decision, and which could be…
Q: Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following…
A:
Q: Lotion Company is considering replacing a machine that is presently used in the production of its…
A: A replacement decision is a kind of managerial decision that the top-level management with the aim…
Q: Equipment Replace ABC is looking to purchase a new machine for a 3 year project, that will cost…
A: Cost of new machine = $800,000 Book value of old machine = 20%*$500,000 = $100,000 After tax salvage…
Q: MTE mechanical engineering Company has a machine purchased 5 years ago at a cost of BDT 100000.00.…
A: Data given: Old Machine: Cost price = BDT 100000 Life of machine =10 years Annual depreciation = BDT…
Q: A die-cutting machine was purchased three years ago for $450,000. The useful life of the equipment…
A: Calculation of after tax cash inflow on sale of old machine: Cost of old machine…
Q: An old machine cost P48,000.00 a year to maintain. What expenditures for a new machine is justified…
A: Present Value Factor = 1(1+i)n where i = Money to Cost n = Period
Q: Freida Company is considering an asset replacement project of replacing a control device. This old…
A: Replacement Decisions are the decisions which are taken to replace the old machine with new machine…
Q: A machine costing P 95,000 is expected to produce 10,000 units of a certain products during its…
A: Depreciation on Fixed assets : Depreciation expense is considered as the charge against the…
Q: The RHIANE Corporation is planning to add a new product line to its present business. The new…
A: SOLUTION- THE LIQUIDITY AND YIELD THEORIES ARE THOSE THAT MAKES THE INVESTOR TO DEMANDS MORE…
Q: If a dump truck for hauling coal has an estimated net cost of $90,000 and is expected to give…
A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due…
Q: Delaney Company is considering replacing equipment that originally cost $519,000 and that has…
A: A sunk cost means cost that is incurred by the businesses in past but this cost cannot be recovered…
Q: depreciation in year 3
A: units of production depreciation method : it is the one of the method for calculation of…
Q: Delaney Company is considering replacing equipment that originally cost $496,000 and has accumulated…
A: Sunk cost means the cost incurred in past and do not have any effect on the current decision-making…
Q: Factor Company is planning to add a new product to its line. To manufacture this product, the…
A: Capital budgeting: It is a method of evaluating the projects which required huge investments and…
Q: The initial cost of a paint sand mill, including its installation, is P800,000. The BIR approved…
A: Initial cost = P 800,000 Salvage value = P 50,000 Dismantling cost = P 15000 Life = 10 Years
Q: An equipment costs P480,000 and has a salvage value of 10% of its cost at the end of its economic…
A: The straight-line method charges depreciation by an equal amount and if the useful life of an asset…
Q: Blooper Industries is considering to replace its magnesium purification system. The company uses…
A: Machine A Cost = $1,127,000 Annual Operating Cost = $19,500 Useful Life = 5 years Machine B Cost =…
Q: A building with historical cost of ₱10,000,000 and accumulated depreciation of ₱4,000,000 is…
A: Revaluation surplus means when replacement cost of the asset is more than carrying value of the…
Q: Delaney Company is considering replacing equipment that originally cost $475,000 and has accumulated…
A: >The question relates to the concept of decision marking. >In decision making process relating…
Q: Waterway Industries is considering the replacement of a piece of equipment with a newer model. The…
A: The answer for the multiple choice question and relevant working are presented hereunder : Purchase…
Q: Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book…
A:
Q: Bramble Corp. is considering the replacement of a piece of equipment with a newer model. The…
A: Correct Answer is Option ‘B’ i.e $117,000
Q: LN Manufacturing is deciding whether to keep or replace an old machine. It obtains the following…
A: New machine net cost=9000-2200=6800
Q: Waterway Industries is considering the replacement of a piece of equipment with a newer model. The…
A: Depreciation is the reduction in the value of an asset due to normal wear and tear, passage of time,…
Q: Concord Corporation is considering the replacement of a piece of equipment with a newer model. The…
A: A sunk cost is a cost that has been already incurred and can not be changed. This kind of cost is…
Q: Francisco Corporation is constructing a new building at a total initial cost of $10,000,000. The…
A: The correct answer is Option (c).
Q: Delaney Company is considering replacing equipment which originally cost $523,000 and which has…
A: Definition: Sunk cost: Sunk cost is the cost that is already incurred and it is not relevant for…
Q: Hybachi Company is trying to decide whether it should purchase new equipment and continue to make…
A: Depreciation formula: Annual depreciation = ( cost of asset - salvage value ) / useful life of years…
Q: Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book…
A: Calculation of total changes in net income if alternative A is adopted: Alternative A Increase…
Q: Otis Company is considering replacing equipment which originally cost P500,000 and which has…
A: Sunk cost is a cost which was already incurred and does not affect the decision making. In the above…
Q: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Initial investment ЕBIT - Taxes + New depreciation - Old…
A: Net present value: It is the difference between the present value of cash inflow and the present…
Q: BH is considering the manufacture of a new product which requires the use of both a new machine and…
A: Relevant Cost: It is a differential cost that differs between projects that is being…
Q: Bramble Corp. is contemplating the replacement of an old machine with a new one. The following…
A: Net advantage (Disadvantage) = Savings in annual operating costs + sale value of old machine -…
Q: Salsa Co. is contemplating the replacement of an old machine with a new one. The following…
A: Relevant cost is a managerial accounting term that describes avoidable costs that are incurred…
Q: A xerox machine was purchased 7 years ago costs P50,000. After making 600,000 copies, the salvage…
A: The book value of asset is calculated as difference between cost price and Accumulated depreciation…
Q: Coronado Industries is contemplating the replacement of an old machine with a new one.. The…
A:
Q: Kramer's Carpet Cleaning which is located in Omaha, Nebraska, plans on acquiring a new carpet…
A: Depreciation expense=Cost of asset-Salvage valueUseful LifeSimple rate of return=Annual incremental…
Q: Coronado Industries is considering the replacement of a piece of equipment with a newer model. The…
A: Straight-line depreciationStraight line depreciation is a method of calculating depreciation and…
Q: Delaney Company is considering replacing equipment that originally cost $600,000 and has accumulated…
A: Sunk cost is the cost that has already been incurred and that does not affect the future course of…
Q: Factor Company is planning to add a new product to its line. To manufacture this product, the…
A: Hi, since you have posted a question with multiple sub parts, as per the guidelines we will solve…
Delaney Company is considering replacing equipment which originally cost $508,000 and which has $355,600
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting machine. Two new models are available: Machine 190-3, which has a cost of $190,000, a 3-year expected life, and after-tax cash flows (labor savings and depreciation) of $87,000 per year; and Machine 360-6, which has a cost of $360,000, a 6-year life, and after-tax cash flows of $98,300 per year. Knitting machine prices are not expected to rise because inflation will be offset by cheaper components (microprocessors) used in the machines. Assume that Filkins’ cost of capital is 14%. Should the firm replace its old knitting machine? If so, which new machine should it use? By how much would the value of the company increase if it accepted the better machine? What is the equivalent annual annuity for each machine?Delaney Company is considering replacing equipment that originally cost $518,000 and that has $362,600 accumulated depreciation to date. A new machine will cost $837,000. What is the sunk cost in this situation? Oa. $681,600 Ob. $124,320 Oc. $155,400 Od. $518,000Delaney Company is considering replacing equipment that originally cost $532,000 and has accumulated depreciation of $372,400 to date. A new machine will cost $891,000. what is the the sunk cost in this situation?
- Otis Company is considering replacing equipment which originally cost P500,000 and which has P460,000 accumulated depreciation to date. A new machine will cost P790,000. What is the sunk cost in this situation?Delaney Company is considering replacing equipment that originally cost $548,000 and has accumulated depreciation of $383,600 to date. A new machine will cost $778,000. The sunk cost in this situation is a. $131,520 b. $613,600 c. $164,400 d. $548,000Delaney Company is considering replacing equipment that originally cost $600,000 and has accumulated depreciation of $420,000 to date. A new machine will cost $790,000 and the old equipment can be sold for $8,000. The sunk cost in this situation is a.$290,000 b.$188,000 c.$180,000 d.$172,000
- ABC Corp is considering replacing equipment that originally cost $600,000 and has accumulated depreciation of $420,000 to date. A new machine will cost $790,000. What is the sunk cost in this situation? (please provide the numerical value)Delaney Company is considering replacing equipment that originally cost $600,000 and has accumulated depreciation of $420,000 to date. A new machine will cost $790,000 and the old equipment can be sold for $8,000. The sunk cost in this situation is a.$290,000 b.$188,000 c.$180,000 d.$172,000 The amount of the average investment for a proposed investment of $201,000 in a fixed asset with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total income of $25,500 for the 4 years is a.$100,500 b.$6,375 c.$50,250 d.$25,500 The _____ method of analyzing capital investment proposals divides the estimated average annual income by the average investment. a.internal rate of return b.net present value c.average rate of return d.cash paybackFuller Industries is considering replacing a machine that is presently used in its production process. Which of the following amounts represents a sunk cost? Original cost Remaining useful life in years Current age in years Book value Current disposal value in cash Future disposal value in cash (in 5 years) Annual cash operating costs OA. $55,000 OB. $33,000 OC. $45,000 D. $9,000 Old Machine Replacement Machine $55,000 $45,000 5 5 5 0 $33,000 $9,000 $0 $0 $8,000 $4,000
- Marigold Corp. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $430000 $630000 Accumulated Depreciation 102000 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $265000 $186600 If the old machine is replaced, it can be sold for $24000. Which of the following amounts is a sunk cost? $186600 $265000 $328000 $630000Crane Company is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $360000 $630000 Accumulated Depreciation 90000 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $280000 $190600 If the old machine is replaced, it can be sold for $24000. Which of the following amounts is a sunk cost? ○ $190600 O $280000 ○ $270000 O $630000Assume that a company is choosing between two alternatives—keep an existing machine or replace it with a machine. The costs associated with the two alternatives are summarized as follows: Existing Machine New Machine Purchase cost (new) $ 15,000 $ 26,000 Remaining book value $ 6,000 Overhaul needed now $ 5,000 Annual cash operating costs $ 11,500 $ 7,000 Salvage value (now) $ 2,000 Salvage value (eight years from now) $ 1,000 $ 6,000 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. Based on a net present value analysis with a discount rate of 14%, what is the financial advantage (disadvantage) of replacing the existing machine with a new machine?