Waterways is considering the replacement of an antiquated machine that has been slowing down production because of breakdowns and added maintenance. The operations manager estimates that this machine still has 2 more years of possible use. The machine produces an average of 50 units per day at a cost of $6.50 per unit, whereas other similar machines are producing twice that much. Th units sell for $8.30. Sales are equal to production on these units, and production runs for 260 days each year. The replacement machir would cost $49,800 and have a 2-year life. Given the information above, what are the consequences of Waterways replacing the machine that is slowing down production because of breakdowns? Replacing the machine will result in a net loss + of $ Waterways should + keep the old mach
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- Waterways is considering the replacement of an antiquated machine that has been slowing down production because of breakdowns and added maintenance. The operations manager estimates that this machine still has 2 more years of possible use. The machine produces an average of 50 units per day at a cost of $6.60 per unit, whereas other similar machines are producing twice that much. The units sell for $9.10. Sales are equal to production on these units, and production runs for 260 days each year. The replacement machine would cost $67,900 and have a 2-year life. Given the information above, what are the consequences of Waterways replacing the machine that is slowing down production because of breakdowns? Replacing the machine will result in a of S Waterways keep the old maWaterways is considering the replacement of an antiquated machine that has been slowing down production because of breakdowns and added maintenance. The operations manager estimates that this machine still has 2 more years of possible use. The machine produces an average of 50.00 units per day at a unit cost of $6.80, whereas other similar machines are producing twice that much. The units sell for $9.30. Sales are equal to production on these units, and production runs for 260 days each year. The replacement machine would cost $68,000 and have a 2-year life. Given the information above, what are the consequences of Waterways replacing the machine that is slowing down production because of breakdowns? Replacing the machine will result in a of $ Waterways keep the oldWaterways is considering the replacement of an antiquated machine that has been slowing down production because of breakdowns and added maintenance. The operations manager estimates that this machine still has 2 more years of possible use. The machine produces an average of 60.00 units per day at a unit cost of $6.80, whereas other similar machines are producing twice that much. The units sell for $9.00. Sales are equal to production on these units, and production runs for 260 days each year. The replacement machine would cost $71,940 and have a 2-year life. Given the information above, what are the consequences of Waterways replacing the machine that is slowing down production because of breakdowns? Replacing the machine will result in a net loss of $ . Waterways should keep the old i
- Higgins Machine Tools, Inc. is currently manufacturing one of its products on a hydraulic stamping press machine. The unit cost of the product is $16, and in the past year 4,000 units were produced and sold for $24 each. It is expected that the future demand of the product and the unit price will remain steady at 4,000 units per year and $24 per unit, respectively.Defender: The machine has a remaining useful life of three years and could be sold on the open market now for $8,000. Three years from now, thethe machine is expected to have a salvage value of $1,800.Challenger: A new machine would cost $40,000, and the unit manufacturing cost on the new machine is projected to be $14. The new machine has an expected economic life of five years and an expected salvage of $8,000. The appropriate MARR is 10%. The firm does not expect a significant improvement in the machine's technology to occur, and it needs the service of either machine for an indefinite period of time.(a) Compute the cash…Concord Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $95,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $12,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 9.000 frames per year, generating a total contribution margin of $92,500. Martson Molders currently sells a molding machine that will allow Concord Pix to increase production and sales to 12,000 frames per year. The machine, which has a ten-year life, sells for $135,000 and would cost $10,000 per year to operate. Concord Pix's current machine costs only $8,000 per year to operate. If Concord Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $19,900 at the end of its ten-year life. Concord…As a result of improvements in product engineering, United Automation is able to sell one of its two milling machines. Both machines perform the same function but differ in age. The newer machine could be sold today for $63,500. Its operating costs are $21,800 a year, but in five years the machine will require a $19,100 overhaul. Thereafter operating costs will be $30,900 until the machine is finally sold in year 10 for $6,350. The older machine could be sold today for $25,900. If it is kept, it will need an immediate $24,500 overhaul. Thereafter operating costs will be $34,000 a year until the machine is finally sold in year 5 for $6,350. Both machines are fully depreciated for tax purposes. The company pays tax at 35%. Cash flows have been forecasted in real terms. The real cost of capital is 13%. a. Calculate the equivalent annual costs for selling the new machine and for selling the old machine. (Do not round intermediate calculations. Enter your answers as a positive value rounded…
- Whispering Winds Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $108,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $8,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $102,000.Martson Molders currently sells a molding machine that will allow Whispering Winds Pix to increase production and sales to 20,000frames per year. The machine, which has a ten-year life, sells for $143,000 and would cost $15,000 per year to operate. Whispering Winds Pix’s current machine costs only $8,000 per year to operate. If Whispering Winds Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $20,000 at…Whispering Winds Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $ 108,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $ 8,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 15,000 frames per year, generating a total contribution margin of $ 102,000. Martson Molders currently sells a molding machine that will allow Whispering Winds Pix to increase production and sales to 20,000 frames per year. The machine, which has a ten-year life, sells for $ 143,000 and would cost $ 15,000 per year to operate. Whispering Winds Pix's current machine costs only $ 8,000 per year to operate. If Whispering Winds Pix purchases the new machine, the old machine could be sold at its book value of $ 5,000. The new machine is expected to have a salvage value of $…Chattanooga Development Company wants to evaluate replacing an older machine requiring significant maintenance which delays production. The older machine can be used for 2 more years of production. The Company could buy a replacement machine at a cost of $55,000 and the new machine would have a 2-year life. The units produced by the machine have a sales price of $8.50. The older machine produces an average of 50 units per day at a cost of $6.50 per unit. The new machine would produce twice as many units at the same cost. Sales units and production units are the same volume, and the machines are operated for 260 days each year. INSTRUCTIONS: Prepare the analysis to evaluate whether the Company should retain or replace the machine. Indicate what the Company should do.
- Sweet Wave Bakery has a machine that is continuing to break down and requires constant maintenance. The operations manager is estimating that this machine has only 2 more years of life. The machine produces an average of 50 units per day at a cost of $6.50 per unit. The bakery is considering replacing this machine with a similar machine. The new machine would cost $55,000 with a 2 year life but could produce twice the production of the existing machine. The units sell for $8.50. Sweet Wave operates the line with this machine 260 days each year. The sales are equal to production on this line. Instructions: Given the information above, what are the consequences of Sweet Wave replacing the maching that is slowing down production because of breakdowns? Revenues (Retain): Sell price x units per day x 260 days x 2 years Production Costs (Retain): Cost per unit x units per day x 260 days x 2 years Revenues (Replace): Sell price x Units per day (x2) x 260 days x 2 years Production Costs…Bramble Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $88,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $12,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 11,000 frames per year, generating a total contribution margin of $85,500. Martson Molders currently sells a molding machine that will allow Bramble Pix to increase production and sales to 15,000 frames per year. The machine, which has a ten-year life, sells for $131,000 and would cost $12,000 per year to operate. Bramble Pix's current machine costs only $8,000 per year to operate. If Bramble Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $19,500 at the end of its ten-year life.…Searching for ways to cut costs and increase profit, one of the industrial engineers at Home Comfort Furniture Manufacturers, Inc. determined that the equivalent annual worth of an existing machine over its remaining useful life of 2 years is $70,000 per year. The IE also determined that used machines like the one currently in use are not available any longer, but the defender can be replaced with a challenger that is more advanced. It will have an AW of $80,000 if it is kept for 2 years or less, $75,000 if it is kept between 3 and 4 years, and $65,000 if it is kept for 5 to 10 years. If the company uses a specified 3-year planning horizon and an interest rate of 15% per year, determine (a) when the company should replace the machine, and (b) the AW for the next 3 years.