Reference: Case Study SDunn Manufacturing is considering the following two alternatives. The cost information for the twoproposals for replacing an equipment are provided are in table below.Initial costBenefits/yearMachine X$120,000$20,000 for the first 10 yearsand $9,000 for the next 10yearsLifeSalvage value $40,000MARR5.2. The NPW of machine X isA) $35,158B) $48,192C) $50,752Machine Y$96,000$12,000 per year for 20years.20 years8%$20,000

Answer : Present value of machine X = Initial cost + Benefit from year 1 to 10 (p/a,i,n) + Benefit…

Answered: Machine X $120,000 st year $20,000 for…

Machine X $120,000 st year $20,000 for the first 10 years and $9,000 for the next 10 years value $40,000 NPW of machine X is Machine Y $96,000 $12,000 per year fe years. 20 years 8% $20,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Reference: Case Study S
Dunn Manufacturing is considering the following two alternatives. The cost information for the two
proposals for replacing an equipment are provided are in table below.
Initial cost
Benefits/year
Machine X
$120,000
$20,000 for the first 10 years
and $9,000 for the next 10
years
Life
Salvage value $40,000
MARR
5.2. The NPW of machine X is
A) $35,158
B) $48,192
C) $50,752
Machine Y
$96,000
$12,000 per year for 20
years.
20 years
8%
$20,000

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