The new unit has a larger capacity and bravo estimates it

Reference no: EM13597510

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?

Note: Use PV Tables found in the PV tabs in the workbook. Be sure to enter 4 decial places. Also, be sure to show costs as negative values.

Reference no: EM13597510

Questions Cloud

The cm landscaping co uses chicken manure to fortify the : the c.m. landscaping co. uses chicken manure to fortify the soil around trees bearing rare fruit. the price standard

Pahl corporation owns a 60 interest in sauer corporation : pahl corporation owns a 60 interest in sauer corporation acquired at book value equal to fair value at the beginning of

Salsa company has fixed costs of 36000 and a contribution : salsa company has fixed costs of 36000 and a contribution margin ration of 24. if expected sales are 200000 what is

During its most recent fiscal year pacific stores sold : during its most recent fiscal year pacific stores sold 200000 electric screwdrivers at a price of 15 each. fixed costs

The new unit has a larger capacity and bravo estimates it : bravo baking co is considering replacing an older freezer with a larger unit to freeze some of its bread. the new unit

A store has budgeted sales of 12000 mens suits in september : a store has budgeted sales of 12000 mens suits in september. management wants to have 6000 suits in inventory at the

Wather aerodynamics inc makes electronically equipped : weather aerodynamics inc. makes electronically equipped weather-detecting balloons for university meteorology

Johnson company is preparing a cash budget for june the : johnson company is preparing a cash budget for june. the company has 12000 cash at the beginning of june and

The working capital needed for project b will be released : perit industries has 100000 to invest. the company is trying to decide between two alternative uses of the funds. the

User Account

All Pages