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suter [353]
2 years ago
8

Zen Manufacturing Company is considering replacing a four-year-old machine with a new, advanced model. The old machine was purch

ased for $60,000, has an estimated useful life of 10 years with no salvage value, and has annual maintenance costs of $15,000. The new machine would cost $45,000, but annual maintenance costs would be only $6,000. The new machine would have an estimated useful life of 10 years with no salvage value. Using straight-line depreciation and an assumed 40% tax rate, compute the additional annual cash inflow if the old machine is replaced.
Business
1 answer:
dedylja [7]2 years ago
4 0

Answer:

$4,800

Explanation:

The computation of additional annual cash inflow is shown below:-

Saving in Annual Maintenance Cost by new machine = $15,000 - $6,000

= $9,000

Net savings on Maintenance = $9,000 × (1 - 0.4)

= $5,400

Decrease in Depreciation due to purchase of New machinery

= ($60,000 ÷ 10) - ($45,000 - 10)

= $6,000 - $4,500

= $1500  

Tax to be paid due to decrease in Depreciation = Decrease in Depreciation due to purchase of New machinery × Tax rate

= $1,500 × 0.4

= $600

Net Annual cash Inflow due to new machinery =  Net savings on Maintenance - Tax to be paid due to decrease in Depreciation

= $5,400 - $600

= $4,800

So, for computing the additional annual cash inflow we simply applied the above formula.

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Answer:

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Explanation:

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The architects of the bretton woods agreement built limited flexibility into the fixed exchange rate system in order to:
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Both parties to a valid and enforceable contract must provide consideration. In a contract for the sale and purchase of real est
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Answer:

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3 0
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abruzzese [7]
The answer is "trade barriers"
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Joint Cost Cheyenne, Inc. produces three products from a common input. The joint costs for a typical quarter follow: Direct mate
Drupady [299]

Answer:

a. Total revenue from the 3 products:

= $75,000 + $80,000 + $30,000

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= $10,850

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