Bravo baking co is considering replacing an older freezer

Reference no: EM13603988

Bravo Baking Co is considering replacing an older freezer with a larger unit to freeze some of its bread. The new unit has a larger capacity and Bravo estimates it can produce and sell an more bread each year. From these additional sales the after tax cash flow is expected to be $4,000. In addition to more sales, the new freezer will save $1,200 in electricity each year. However, the new freezer will cost an additional $2,000 each year for maintenance. The cost of the new unit is $25,000 and it is expected to last 10 years. The salvage value at the end of its life is $6,000. The old unit is fully depreciated and can be disposed at cost. Determine the Net Present Value of purchasing the new freezer using a required rate of return of 14%. Should Bravo purchase the freezer?

Reference no: EM13603988

Questions Cloud

The stockholders equity section of the balance sheet of : the stockholders equity section of the balance sheet of flint corp. with certain details omitted appears below

For supply item mt bluesky company has been ordering 150 : for supply item mt bluesky company has been ordering 150 units based on the recommendation of the salesperson who

On july 1 2010 ellison company granted sam wine an employee : on july 1 2010 ellison company granted sam wine an employee an option to buy 400 shares of ellison co. stock for 30 per

Autocar company manufactures automobiles the red car : autocar company manufactures automobiles. the red car division sells its red cars for 25000 each to the general

Bravo baking co is considering replacing an older freezer : bravo baking co is considering replacing an older freezer with a larger unit to freeze some of its bread. the new unit

Upper darby park department is considering a new capital : upper darby park department is considering a new capital investment. the cost of the machine will be 200000. the

Assume that the manager of the club is able to increase : pecs alley is a regional chain of health clubs. the managers of the clubs who have authority to make investments as

Book value per share shown below is information relating to : book value per share shown below is information relating to the stockholders equity section of earthling inc. 6

Topple company produces a single product operating data for : topple company produces a single product. operating data for the company and its absorption costing income statement

User Account

All Pages