Answered

At Westonci.ca, we provide reliable answers to your questions from a community of experts. Start exploring today! Explore a wealth of knowledge from professionals across various disciplines on our comprehensive Q&A platform. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.

Granfield Company has a piece of manufacturing equipment with a book value of $44,500 and a remaining useful life of four years. At the end of the four years the equipment will have a zero salvage value. The market value of the equipment is currently $22,900. Granfield can purchase a new machine for $129,000 and receive $22,900 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $19,900 per year over the four-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is:

Sagot :

Tundexi

Answer:

$26,500 decrease

Explanation:

The total increase or decrease in net income by replacing the current machine with the new machine = Saving in variable manufacturing costs + Sale value of old machine - Purchase price of new machine

= ($19,900*4) + $22,900 - $129,000

= $79,600 + $22,900 - $129,000

= $26,500 decrease

Thank you for visiting our platform. We hope you found the answers you were looking for. Come back anytime you need more information. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Westonci.ca is here to provide the answers you seek. Return often for more expert solutions.