Bacon Jewelers are interested in buying a new stone-polishing machine for $25,000. The new machine will reduce stone polishing time substantially and annual operating costs are expected to be only $5,000. The current machine, with a fair market value of $10,000 and a book value of $15,000, has annual operating costs of $12,500. The current machine can be updated for a cost of $17,500. Because of advancing technology, neither the new machine nor the remodelled old machine is expected to last longer than four years. The new machine will have a salvage value after taxes of $500 but the remodelled machine will have a salvage value of zero. The company has a tax rate of 30 percent. For tax purposes, the equipment is class 8, which has a CCA rate of 20% .
Required:
Several categories of cash flows are common in capital budgeting analysis. Place as much information from this problem as possible into each one of the cash flow categories.

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The Answer of Bacon Jewelers are interested in buying a new stone-polishing machine for $25,000. The new machine will reduce stone polishing time substantially and annual operating costs are expected to be only $5,000. The current machine, with a fair market value of $10,000 and a book value of $15,000, has annual operating costs of $12,500. The current machine can be updated for a cost of $17,500. Because of advancing technology, neither the new machine nor the remodelled old machine is expected to last longer than four years. The new machine will have a salvage value after taxes of $500 but the remodelled machine will have a salvage value of zero. The company has a tax rate of 30 percent. For tax purposes, the equipment is class 8, which has a CCA rate of 20% .
Required:
Several categories of cash flows are common in capital budgeting analysis. Place as much information from this problem as possible into each one of the cash flow categories.

Bacon Jewelers Are Interested in Buying a New Stone-Polishing Machine