The TechGuide Company produces and sells 7,500 modular computer desks per year at a selling price of $750 each. Its current production equipment, purchased for $1,800,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $450,000. However, the emergence of a new molding technology has led TechGuide to consider either up- grading or replacing the production equipment. The following table presents data for the two alternatives: Home Insert Page Layout Formulas Data Review Upgrade $3,000,000 Replace $4,800,000 2 One-time equipment costs 3 Variable manufacturing cost per desk 4 Remaining useful life of equipment (in years) 5 Terminal disposal value of equipment 150 75 3 3 24 24
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All equipment costs will continue to be
Q. Should TechGuide upgrade its production line or replace it? Show your calculations.
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- The TechHelp Company produces and sells 7,500 modular computer desks per year at a selling price of $ 600 each. Its current production equipment, purchased for$ 1, 500 ,000 and with a 5-year useful life, is only 2 years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of$ 550, 000. However, the emergence of a new molding technology has led TechHelp to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives:CariTech (CT) Company produces and sells 7,000 Special purpose chairs per year at a selling price of $850 each. Its current production equipment, purchased for $1,850,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $500,000.However, the emergence of a new technology has led CT to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives: A B c 1. Choice Upgrade Replace 2. One-time equipment costs $3,000,000 $4,800,000 3. Variable manufacturing cost per chair $150 $70 4. Remaining useful life of equipment (years) 3 3 5. Terminal disposal value of equipment 0 0 Required1) Should CT upgrade its production line or replace it? Show your calculations. 2) Suppose the one-time equipment cost to replace the…Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of $850 each. Its current production equipment, purchased for $1,850,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $500,000. However, the emergence of a new technology has led SS to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives: А В 1 Choice Upgrade Replace 2 One-time equipment costs $3,000,000 $4,800,000 3 Variable manufacturing cost per Treat $150 $70 4 Remaining useful life of equipment (years) 3 3 5 Terminal disposal value of equipment
- Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of $850 each. Its current production equipment, purchased for $1,850,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $500,000. However, the emergence of a new technology has led SS to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives: A B C 1 Choice Upgrade Replace 2 One-time equipment costs $3,000,000 $4,800,000 3 Variable manufacturing cost per Treat $150 $70 4 Remaining useful life of equipment (years) 3 3 5 Terminal disposal value of equipment 0 0 4. Assume that all data are as given in the original exercise. Nick Son is SS’s manager, and his bonus is based on operating income. Because he is likely to relocate…Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of $850 each. Its current production equipment, purchased for $1,850,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $500,000. However, the emergence of a new technology has led SS to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives: A B C 1 Choice Upgrade Replace 2 One-time equipment costs $3,000,000 $4,800,000 3 Variable manufacturing cost per Treat…Sugar Sweet (SS) Company produces and sells 7,000 specialty Treats per year at a selling price of $850 each. Its current production equipment, purchased for $1,850,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $500,000. However, the emergence of a new technology has led SS to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives: A B C 1 Choice Upgrade Replace 2 One-time equipment costs $3,000,000 $4,800,000 3 Variable manufacturing cost per Treat $150 $70 4 Remaining useful life of equipment (years) 3 3 5 Terminal disposal value of equipment 0 0 Required (1) Should SS upgrade its production line or replace it? Show your calculations. (2) Suppose the one-time equipment cost to replace the production equipment…
- A company is currently producing chemical compounds by a process installed 10 years ago at a cost of $100,000. It was assumed that the process would have a 20-year life with a zero salvage value. The current market value of the equipment, however, is $60,000, and the initial estimate of its economic life is still good. The annual operating costs associated with this process are $18,000. A sales representative from U.S. Instrument Company is trying to sell a new chemicalcompound- making process to the company. This new process will cost $200,000 have a service life of IO years with a salvage value of $20,000, and reduce annual operating costs to $4,000. Assuming the company desires a return of 12% on all investments, should it invest in the new process?Cari Pump (CP) Company is considering either upgrading or replacing its production equipment. The company produces and sells annually 7,000 pumps at a selling price of $850 each. The current production equipment, purchased for $1,850,000 and with a five-year useful life, is only two years old and is depreciated on a straight-line basis. Also, it has a terminal disposal value of $0 and a current disposal price of $500,000. The following table presents data for the two alternatives: A B C 1 Choice Upgrade Replace 2 One-time equipment costs $3,000,000 $4,800,000 3 Variable manufacturing cost per Pump $150 $70 4 Remaining useful life of equipment (years) 3 3 5 Terminal disposal value of equipment Required 0 0 PLEASE ONLY ANSWER PART 2 Prepare a schedule, for the remaining 3 years, reflecting whether CP should upgrade its production line or replace it? Assume that the one-time equipment cost to replace the production equipment…Cari Pump (CP) Company is considering either upgrading or replacing its production equipment. The company produces and sells annually 7,000 pumps at a selling price of $850 each. The current production equipment, purchased for $1,850,000 and with a five-year useful life, is only two years old and is depreciated on a straight-line basis. Also, it has a terminal disposal value of $0 and a current disposal price of $500,000. The following table presents data for the two alternatives: A B C 1 Choice Upgrade Replace 2 One-time equipment costs $3,000,000 $4,800,000 3 Variable manufacturing cost per Pump $150 $70 4 Remaining useful life of equipment (years) 3 3 5 Terminal disposal value of equipment Required 0 0 A, Prepare a schedule, for the remaining 3 years, reflecting whether CP should upgrade its production line or replace it? Assume that the one-time equipment cost to replace the production equipment is negotiable and all…
- Cari Pump (CP) Company is considering either upgrading or replacing its production equipment. The company produces and sells annually 7,000 pumps at a selling price of $850 each. The current production equipment, purchased for $1,850,000 and with a five-year useful life, is only two years old and is depreciated on a straight-line basis. Also, it has a terminal disposal value of $0 and a current disposal price of $500,000. The following table presents data for the two alternatives: A B C 1 Choice Upgrade Replace 2 One-time equipment costs $3,000,000 $4,800,000 3 Variable manufacturing cost per Pump $150 $70 4 Remaining useful life of equipment (years) 3 3 5 Terminal disposal value of equipment Required 0 0 Prepare a schedule, for the remaining 3 years, reflecting whether CP should upgrade its production line or replace it? Assume that the one-time equipment cost to replace the production equipment is negotiable and all other…The Container Corporation of America is considering replacing an automatic painting machine purchased 9 years ago for $700,000. It has a market value today of $40,000. The unit costs $350,000 annually to operate and maintain. A new unit can be purchased for $800,000 and will have annual O&M costs of $120,000. If the old unit is retained, it will have no salvage value at the end of its remaining life of 10 years. The new unit, if purchased, will have a salvage value of $100,000 in 10 years. Using an EUAC measure and a MARR of 20% should the automatic painting machine be replaced if the old automatic painting machine is taken as a trade-in for its market value of $40,000? Solve, a. Use the cash flow approach (insider’s viewpoint approach). b. Use the opportunity cost approach (outsider’s view point approach).Medavoy Company is considering a new project that complements its existing business. The machine required for the project costs $4.5 million. The marketing department predicts that sales related to the project will be $2.67 million per year for the next four years, after which the market will cease to exist. The machine will be depreciated to zero over its 4-year economic life using the straight-line method. Cost of goods sold and operating expenses related to the project are predicted to be 30 percent of sales. The company also needs to add net working capital of $190,000 immediately. The additional net working capital will be recovered in full at the end of the project's life. The corporate tax rate is 23 percent and the required return for the project is 13 percent. What is the value of the NPV for this project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Answer is complete but…