Texts: Use the following to answer questions 93-95: to be rebuilt or replaced. The following information has been gathered relative to this (Ignore income taxes in this problem.) Carlson Manufacturing has some decision: Purchase cost new Remaining book value... Cost to rebuild now..... Major maintenance at the end of 3 Annual cash operating costs.... Salvage value at the end of 5 years Salvage value now........... que pore A) $(48,000) B) $(39,000) years gras A) $(28,840) B) $(19,160) C) $(14,420) D) $(36,050) New Present Equipment Equipment $48,000 on ba $50,000 $30,000 $25,000 $8,000 $10,000 $3,000 $9,000 igge fac e equipment that needs Carlson uses the total cost approach and a discount rate of 12%. Regardless of which option is chosen, rebuild or replace, at the end of five years Carlson Manufacturing plans to close t domestic manufacturing operations and to move these operations to foreign countries. 93. If the new equipment is purchased, the present value of all cash flows that occur now is: 1:01 awib: $5,000 $8,000 $7,000 C) $(41,000) D) $(37,000) Answer: B Level: Easy LO: 1 211372 0 94. If the new equipment is purchased, the present value of the annual cash operating costs associated with this alternative is: To quinz Answer: A Level: Medium LO: 1 95. If the equipment is rebuilt, the present value of all cash flows that occur now is: A) $(55,000) B) $(25,000) C) $(16,000) D) $(23,000) Answer: B Level: Easy LO: 1 Chap Use th (Igna desir optic Opti $60 $20 cas The $30 Op Ce ΤΙ th W W $ C
Chap
Use t ignc desir opti Opt $60 $20 cas Th $3
Present New Equipment Equipment $50,000 $48,000 $30,000 $25,000 $8,000 $5,000 $10,000 $8,000 $3,000 $7,000 $9,000
decision:
Purchase cost new Remaining book value.. Cost to rebuild now... Major maintenance at the end of 3 years . Annual cash operating costs... Salvage value at the end of 5 years Salvage value now....
O c T th W
is: A) $48,000 B) $(39,000) C) $41,000 D) $(37,000)
Answer: B Level: Easy LO: 1
94. If the new equipment is purchased, the present value of the annual cash operating costs associated with this alternative is: A) $28,840 B) $19,160 C) $14,420 D) $36,050
Answer: A Level: Medium LO: 1
95. If the equipment is rebuilt, the present value of all cash flows that occur now is: A) $(55,000) B) $25,000 C) $16,000 D) $23,000
Answer: B Level: Easy LO: 1