Assume your firm has an unused machine that originally cost $75,000, has a book value of $20,000, and a market value of $25,000. Ignoring taxes, what is the opportunity cost of using this machine?
Added by Eugenia B.
Step 1
In this case, since the machine is not being used, the opportunity cost is the potential revenue or savings that could be generated by using the machine for an alternative purpose. To calculate the opportunity cost, we need to consider the potential benefits of Show more…
Show all steps
Your feedback will help us improve your experience
Breanna Ollech and 59 other Principles of Accounting educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Recommended Videos
A new machine can be purchased for $1,500,000. It will cost $45,000 to ship and $55,000 to fine-tune the machine. The new machine will replace an older version that is fully depreciated and will be sold for $125,000. The firm's income tax rate is 40%. What is the net investment cost of the machine for capital budgeting purposes? Show your work.... $1,525,000 $1,725,000 $1,600,000 $1,675,000
Derrick D.
During the current year, Erving Company exchange an old packing machine which cost 1 200 00 and was 50% depreciated for another used machine and paid a cash difference of 160 000. The fair value of the old packaging machine was determined to be 700 000. What is the cost of the machine acquired in the exchange? What is the gain on exchange?
Rahul M.
You purchased a machine four years ago at a cost of $5,000. It has a book value of $1,300. It can be sold now for $2,300, or it could be used for three more years, at the end of which time it would have no salvage value. Assuming it is kept for three more years, what is the amount of economic loss during this ownership?
Haricharan G.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD