The baltic company is consider the purchase of a new

Assignment Help Cost Accounting

Reference no: EM13370915

The baltic company is consider the purchase of a new machine tool to replace an obsolete one. The machine being used for the operation has a tax book value of $80,000 with an annual depreciation expense of 8,000. it has a salvage value (resale value )of 40,000, is in good working order, and can last at least 10 more years. the proposed machine will perform the operation so much more proficiently that baltic engineers estimate that labor, material, and other direct costs of the operation may be reduced 60,000 a year if it is installed. The proposed machine costs 240,000 delivered and installed, and it's economic life is predictable at 10 years, with zero salvage value. the company expects to earn 14% on it's investment after taxes(14% is the firm's cost of capital). the tax rate is 40 percent and the firm uses straighline depreciation. Any gain or loss on the machine is subject to tax at 40 %.

Should baltic buy the new machine?

Reference no: EM13370915

Questions Cloud

Big chuck wishes to maintain a 10000 minimum cash balance : big chuck wishes to maintain a 10000 minimum cash balance at all times. additional financing is available and retired

Joycelyn gave a diamond necklace to her granddaughter emma : joycelyn gave a diamond necklace to her granddaughter emma. joycelyn had purchased necklace in 1980 for 15000. the fmv

On date of the cash distribution janes basis in her efg inc : on date of the cash distribution janes basis in her efg inc. stock was 10000 and joes basis in his efg inc. stock was

The president of the corporation is not convinced that : the president of the corporation is not convinced that interest expense should be excluded from the evaluation of the

The baltic company is consider the purchase of a new : the baltic company is consider the purchase of a new machine tool to replace an obsolete one. the machine being used

With possibility of the us congress relaxing restrictions : with possibility of the us congress relaxing restrictions on cutting old growth timber a local lumber company is

1the accounting equation is assets liabilities owners : 1.the accounting equation is assets liabilities owners equity. provide me an example of a transaction that would

Santos company is starting its advertising campaign for : santos company is starting its advertising campaign for next year and has prepared the subsequent budget data based on

Create the required general journal entry to record the : create the required general journal entry to record the subsequent transactions for the flaherty company.a. incurred

User Account

All Pages