Ask Question, Ask an Expert


Ask Accounting Basics Expert

Q1) Your firm utilizes a manufacturing machine which was bought 6 years ago. Machine's book value today is 0, and you suppose it can work for 5 years more. Production cost with this machine is $6 per unit. Your supplier offered new machine in a trade-in deal. New machine's cost is $55,000, and supplier is willing to buy old machine from you for $18,000. Production cost per unit in new machine is $3.5, and new machine has straight line depreciation for 5 years to zero terminal value. You have evaluated that your firm will sell 6500 units per year, with selling price of $17 each. Firm'a tax rate is 30% and its discount rate is 9%.

1. Should firm do the trade-in deal? (that is, should old machine be replaced?)

2. Compute IRR of the trade-in. (that is, find out IRR of the relative cash flows)

3. Plot graph illustrating profitability of investment depending on number of units sold.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M919524

Have any Question? 

Related Questions in Accounting Basics

Case study - the complete accounting cyclerequirement 1

CASE STUDY - THE COMPLETE ACCOUNTING CYCLE REQUIREMENT 1: During its first month of operation, the View Corporation, a construction company which specializes in home remodeling, completed the following transactions: 1-Ja ...

1 do you believe economic principles like competition apply

1. Do you believe economic principles like competition apply in both private and public organizations? 2. Are there other public functions that might benefit from more competition, including competition from private firm ...

Your dog peyton has severe allergies and cannot have the

Your dog, Peyton, has severe allergies and cannot have the usual store-bought dog treats. You have been making homemade treats for him that are all-natural and hypoallergenic. Over the past year, you have been making and ...

Principles of accountingyou will select a company from this

Principles of Accounting You will select a company from this list, and you will analyze the company's financial performance, highlighting accounting principles and methods learned in this course. This project requires yo ...

Accounting theory assignment read the articles on study

Accounting Theory Assignment Read the articles on study desk: Volkswagen The scandal explained Instructions This assignment is a research based essay where you are required to relate a practical example to accounting the ...

Reference example example in text citation she stated

Reference example: Example : In text citation : She stated, "Students often had difficulty using APA style" (Jones, 1998, p. 199), Reference citation: Bernstein, M. (2002). 10 tips on writing the living Web. A List Apart ...

Nbsptask 1 - planning for profit and cost controlobjective

TASK 1 - Planning for profit and cost control Objective - To enable the learner to prepare the budgeted profit statement and undertake cost-volume-profit analysis for decision making Anhad Sdn. Bhd. manufactures car alar ...

Practical assessment- case study assignment question 1 case

Practical Assessment- Case Study Assignment Question 1: Case study You are a financial adviser and the following information is an extract of data you gathered as part of fact finding during an initial client consultatio ...

Accounting questionsinternational accounting focuses on

Accounting Questions: International Accounting focuses on foreign currency and hedging. Why might a company prefer a foreign currency option rather than a forward contract in hedging a foreign currency firm commitment? W ...

Assignmentnbsp the eatery is a restaurant in dekalb

Assignment  The Eatery is a restaurant in DeKalb, Illinois. It specializes in deluxe sandwiches in a moderate price range. Michael Raye, the manager of The Eatery, has determined that during the last two years the sales ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate