Doughboy bakery would like to buy a new machine for putting

Reference no: EM13592611

Doughboy Bakery would like to buy a new machine for putting icing and other toppings on pastries. These are now put on by hand. The machine that the bakery is considering costs $85,000 new. It would last the bakery for seventeen years but would require a $5,000 overhaul at the end of the fourteenth year. After seventeen years, the machine could be sold for $3,500.

The bakery estimates that it will cost $15,000 per year to operate the new machine. The present manual method of putting toppings on the pastries costs $35,000 per year. In addition to reducing operating costs, the new machine will allow the bakery to increase its production of pastries by 4,000 packages per year. The bakery realizes a contribution margin of $0.80 per package. The bakery requires a 14% return on all investments in equipment.

Required:

1.What are the annual net cash inflows that will be provided by the new machine?

Reference no: EM13592611

Questions Cloud

In performing a test of controls for sales order approvals : in performing a test of controls for sales order approvals the cpas stipulate a tolerable deviation rate of 8 percent

In january 2013 mitzu co pays 2700000 for a tract of land : in january 2013 mitzu co. pays 2700000 for a tract of land with two buildings on it. it plans to demolish building 1

The standard and actual prices per pound of raw material : the standard and actual prices per pound of raw material are 4.00 and 4.50 respectively. a total of 10500 pounds of raw

How could you convert butanenitrile into the following : how could you convert butanenitrile into the following compounds? write each step showing the reagents needed. b

Doughboy bakery would like to buy a new machine for putting : doughboy bakery would like to buy a new machine for putting icing and other toppings on pastries. these are now put on

In its first year of operations finishing touches has : finishing touches has two classes of stock authorized 8 12 par preferred and 1 par value common. the following

In the formation of diacetylferrocene the product is : in the formation of diacetylferrocene the product is always the one in which each ring is monoacetylated. why is no

Power drive corporation has the following beginning : power drive corporation designs and produces a line of golf equipment and golf apparel. power drive has 110000 shares

Before considering a net operating loss carryforward of 40 : before considering a net operating loss carryforward of 40 million fowler corporation reported 100 million of pretax

User Account

All Pages