Felder's manufacturing is considering the purchase of new equipment that costs $750,000 to replace equipment that is old and inefficient.Felder has found a buyer for the old equipment who will pay $8,000 for it.The new equipment is expected to produce $12,000 of additional revenue each year,but will result in additional maintenance cost of $2,000.The new equipment will have a salvage of $10,000 and will be depreciated over 10 years.
Required:

Identify the amount and timing of the cash flows relevant to Felder’s decision to purchase the new equipment.

Question

Felder's manufacturing is considering the purchase of new equipment that costs $750,000 to replace equipment that is old and inefficient.Felder has found a buyer for the old equipment who will pay $8,000 for it.The new equipment is expected to produce $12,000 of additional revenue each year,but will result in additional maintenance cost of $2,000.The new equipment will have a salvage of $10,000 and will be depreciated over 10 years.
Required:

Identify the amount and timing of the cash flows relevant to Felder’s decision to purchase the new equipment.

Quizplus · Accepted Answer

The Answer of Felder's manufacturing is considering the purchase of new equipment that costs $750,000 to replace equipment that is old and inefficient.Felder has found a buyer for the old equipment who will pay $8,000 for it.The new equipment is expected to produce $12,000 of additional revenue each year,but will result in additional maintenance cost of $2,000.The new equipment will have a salvage of $10,000 and will be depreciated over 10 years.
Required:

Identify the amount and timing of the cash flows relevant to Felder’s decision to purchase the new equipment.

Felder's Manufacturing Is Considering the Purchase of New Equipment That