The confectioners corner inc would like to buy a new

Reference no: EM13483519

The Confectioner's Corner Inc. would like to buy a new machine that automatically dips chocolates. The dipping operation is currently done largely by hand. The machine the company is considering costs $140,000. The machine would be usable for 10 years but would require the replacement of several key parts at the end of the 5th year. These parts would cost $8,500, including installation. After 10 years, the machine could be sold for $7,250.

The company estimates that the cost to operate the machine will be $8,000 per year. The present method of dipping chocolates costs $32,000 per year. In addition to reducing costs, the new machine will increase production by 6,400 boxes of chocolates per year. The company realizes a contribution margin of $2.40 per box. A 16% rate of return is required on all investments.

Required QUESTION:

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

Reference no: EM13483519

Questions Cloud

Which product should have a larger markup over variable : which product should have a larger markup over variable cost a product whose demand is elastic or a product whose

Given a normal distribution with 100 and 10 what is the : given a normal distribution with ?100 and ? 10 what is the probability that a. x gt 75? b. x lt 70? c. x lt 80 or x gt

Scott company is a merchandising business that was started : problem 2. scott company is a merchandising business that was started in 2012. scott uses the perpetual inventory

The building has a useful life of 25 years and no salvage : 1.lloyd christmas ltd.s accounting records reflect the following account balances

The confectioners corner inc would like to buy a new : the confectioners corner inc. would like to buy a new machine that automatically dips chocolates. the dipping operation

According to the federal reserve what is the most important : go to www.federalreserve.govgeneral.htmlthttpwww.federalreserve.govgeneral.htmgt and click on the link to general

What are the four elements of a firms credit policy to : what are the four elements of a firms credit policy? to what extent can firms set their own credit policies as opposed

Given the following statement please indicate whether it is : 1. what would be the cost of retained earnings equity for tangshan mining if the expected return on u.s. treasury bills

Jonathan macintosh is a highly successful pennsylvania : jonathan macintosh is a highly successful pennsylvania orchardman who has formed his own company to produce and package

User Account

All Pages