The Hub Store at a university in eastern Canada is considering purchasing a self-serve checkout machine similar to used in many grocery stores and other retail outlets. Currently the university pays part-time wages to students total $59,500 per year. A self-serve checkout machine would reduce part-time student wages by $39,500 per year. The machine would cost $330,000 and has a 10-year useful life. Total costs of operating the checkout machine would b $5,900 per year, including maintenance. Major maintenance would be needed on the machine in five years at a tot of $10,900. The salvage value of the checkout machine in 10 years would be $44,500. The CCA rate is 25%. Management requires a 9% after-tax return on all equipment purchases. The company's tax r 30%. Required: 1. Determine the before-tax net annual cost savings that the new checkout machine will provide. Net annual cost savings

The Hub Store at a university in eastern Canada is considering purchasing a self-serve checkout machine similar to used in many grocery stores and other retail outlets. Currently the university pays part-time wages to students total $59,500 per year. A self-serve checkout machine would reduce part-time student wages by $39,500 per year. The machine would cost $330,000 and has a 10-year useful life. Total costs of operating the checkout machine would b $5,900 per year, including maintenance. Major maintenance would be needed on the machine in five years at a tot of $10,900. The salvage value of the checkout machine in 10 years would be $44,500. The CCA rate is 25%. Management requires a 9% after-tax return on all equipment purchases. The company's tax r 30%. Required: 1. Determine the before-tax net annual cost savings that the new checkout machine will provide. Net annual cost savings

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 1EA: Garrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help...

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Garrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help in organizing its inventory. Due to the steep learning curve required to use the new software, Garrison must decide between hiring two part-time college students or one full-time employee. Each college student would work 20 hours per week, and would earn $1 S per hour. The full-time employee would work 40 hours per week and would earn $15 per hour plus the equivalent of $2 per hour in benefits. Employees are given two polo shirts to wear as their uniform. The polo-shirts cost Garrison $10 each. What are the relevant costs, relevant revenues, sunk costs, and opportunity costs for Garrison?
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The Hub Store at a university in eastern Canada is considering purchasing a self-serve checkout machine similar to those used in many grocery stores and other retail outlets. Currently the university pays part-time wages to students totalling $63,500 per year. A self-serve checkout machine would reduce part-time student wages by $43,500 per year. The machine would cost $410,000 and has a 10-year useful life. Total costs of operating the checkout machine would be $6,700 per year, including maintenance. Major maintenance would be needed on the machine in five years at a total cost of $11,700. The salvage value of the checkout machine in 10 years would be $48,500. The CCA rate is 25%. Management requires a 9% after-tax return on all equipment purchases. The company’s tax rate is 30%. Using the data from (1) above and other data from the exercise, compute the checkout machine’s net present value. (Hint: Use Microsoft Excel to calculate the discount factor(s).)
The Hub Store at a university in eastern Canada is considering purchasing a self-serve checkout machine similar to those used in many grocery stores and other retail outlets. Currently the university pays part-time wages to students totalling $58,000 per year. A self-serve checkout machine would reduce part-time student wages by $38,000 per year. The machine would cost $300,000 and has a 10-year useful life. Total costs of operating the checkout machine would be $5,600 per year, including maintenance. Major maintenance would be needed on the machine in five years at a total cost of $10,600. The salvage value of the checkout machine in 10 years would be $43,000. The CCA rate is 25%. Management requires a 10% after-tax return on all equipment purchases. The company’s tax rate is 30%. Required:1. Determine the before-tax net annual cost savings that the new checkout machine will provide. 2-a. Using the data from (1) above and other data from the exercise, compute the checkout…
ces The Hub Store at a university in eastern Canada is considering purchasing a self-serve checkout machine similar to those used in many grocery stores and other retail outlets. Currently the university pays part-time wages to students totalling $64,500 per year. A self-serve checkout machine would reduce part-time student wages by $44,500 per year. The machine would cost $430,000 and has a 10-year useful life. Total costs of operating the checkout machine would be $6,900 per year, including maintenance. Major maintenance would be needed on the machine in five years at a total cost of $11,900. The salvage value of the checkout machine in 10 years would be $49,500. The CCA rate is 25%. Management requires a 9% after-tax return on all equipment purchases. The company's tax rate is 30%. Required: 1. Determine the before-tax net annual cost savings that the new checkout machine will provide. Net annual cost savings 2-a. Using the data from (1) above and other data from the exercise,…
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