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Bramble Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $107,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $9,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $102.000. Martson Molders currently sells a molding machine that will allow Bramble Pix to increase production and sales to 20,000 frames pem year. The machine, which has a ten-year life, sells for $142.000 and would cost $15,000 per year to operate. Bramble Pix's current machine costs only $8,000 per year to operate. If Bramble Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at the end of its ten-year life. Bramble Pix uses straight-line depreciation. Click here to view the factor table. (a) Calculate the new machine's net present value assuming a 16% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.) Ne

Bramble Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $107,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $9,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $102.000. Martson Molders currently sells a molding machine that will allow Bramble Pix to increase production and sales to 20,000 frames pem year. The machine, which has a ten-year life, sells for $142.000 and would cost $15,000 per year to operate. Bramble Pix's current machine costs only $8,000 per year to operate. If Bramble Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at the end of its ten-year life. Bramble Pix uses straight-line depreciation. Click here to view the factor table. (a) Calculate the new machine's net present value assuming a 16% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.) Ne

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter11: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 9E: Machine replacement decision A company is considering replacing an old piece of machinery, which...
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a) calculate net present value 16% discounted rate?

b) IRR %
c)payback period =. years
 
View Policies Current Attempt in Progress Bramble Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $107,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $9,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $102,000. Martson Molders currently sells a molding machine that will allow Bramble Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for $142,000 and would cost $15,000 per year to operate. Bramble Pix's current machine costs only $8,000 per year to operate. If Bramble Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at the end of its ten-year life. Bramble Pix uses straight-line depreciation. Click here to view the factor table. (a) Calculate the new machine's net present value assuming a 16% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.) Net present value
Transcribed Image Text:View Policies Current Attempt in Progress Bramble Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $107,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $9,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $102,000. Martson Molders currently sells a molding machine that will allow Bramble Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for $142,000 and would cost $15,000 per year to operate. Bramble Pix's current machine costs only $8,000 per year to operate. If Bramble Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at the end of its ten-year life. Bramble Pix uses straight-line depreciation. Click here to view the factor table. (a) Calculate the new machine's net present value assuming a 16% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, e.g. 58,971.) Net present value
Use Excel or a similar spreadsheet application to calculate the new machine's internal rate of return. (Round answer to 2 decimal places, e.g. 1.25%.) Internal rate of return eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer (c) Calculate the new machine's payback period. (Round answer to 2 decimal places, e.g. 1.25.) Payback period years eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
Transcribed Image Text:Use Excel or a similar spreadsheet application to calculate the new machine's internal rate of return. (Round answer to 2 decimal places, e.g. 1.25%.) Internal rate of return eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer (c) Calculate the new machine's payback period. (Round answer to 2 decimal places, e.g. 1.25.) Payback period years eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer
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