Fall 2018 ACC 381 Accounting Information Systems Lab Excel Assignment 2 Investment Evaluation Analysis ompany is considering upgrading its manufacturing equipment. The uction has identified three possible actions Widget could ta th ough none is Vice-President o options would replace the existing equipment with purchases of new equipm committee has required. One option would upgrade their current equipment and the other ke to accomplish the upgrade ent. The review asked you to review each of the options to identify relevant cost data and to prepar e a schedule comparing the three options to see if any are worth implementing. Your alysis schedule is to include comparative relevant costs and a present value calculation Option One: Using this option Widget would upgrade their current equipment to make efficient. The equipment, which is three q projected useful life, would be upgraded at a cost of $75,000. The upgrades useful life of the equipm uarters depreciated but has reached the end of its would extend the ent by 8 years, The cost of the upgrade would be depreciated over the new useful life and result is tax savings (a cash infow) of $900 per year. At the end of its useful life, you estimate the equipment can be sold for $50,000 Option Two: This option would require Widget to purchase new up-to-date equipment at a cost of $310,000. This new equipment would have an expected useful life of 8 years and result in an annual tax savings of $4,900. At the end of its useful life, it is estimated the new equipment can be sold for $135,000 Option Three: Another equipment manufacturer has provided a proposal offering to supply a competing brand. Under this proposal, Widget would purchase the equipment for $255,000. This equipment has a 9 year useful life and an estimate $100,500 salvage value with an annual tax savings of S3,500 Additional Information: In order to accommodate any of the equipment options, Widget would need to first upgrade the electrical supply capacity and the floor supports in the manufacturing building. The work would be accomplished using Widget's maintenance department at a cost of $47,550 Based on your discussions with the Maintenance Department supervisor, it is estimated that ann three options respectively The Production Department supervisor was quite excited about either upgrading their existing equipment or purchasing replacement equipment. The supervisor estimates that the upgrade to the new equipment would reduce annual labor cost by $29,000 for option 1, $17,500 for option 2 and $18,000 for option 3 The Sales Manager provided estimates of the effect on sales revenue based on the lower prices Widget can charge due to the labor cost savings. She estimates gross margin increases of S9,700, $57,000, and $39,500 per year for options 1,2, and 3 respectively . ual maintenance costs would increase by $20,000, $20,000 and $15,000 for the . Fall 2018 ACC 381 Accounting Information Systems Lab Excel Assignment 2 Investment Evaluation Analysis ompany is considering upgrading its manufacturing equipment. The uction has identified three possible actions Widget could ta th ough none is Vice-President o options would replace the existing equipment with purchases of new equipm committee has required. One option would upgrade their current equipment and the other ke to accomplish the upgrade ent. The review asked you to review each of the options to identify relevant cost data and to prepar e a schedule comparing the three options to see if any are worth implementing. Your alysis schedule is to include comparative relevant costs and a present value calculation Option One: Using this option Widget would upgrade their current equipment to make efficient. The equipment, which is three q projected useful life, would be upgraded at a cost of $75,000. The upgrades useful life of the equipm uarters depreciated but has reached the end of its would extend the ent by 8 years, The cost of the upgrade would be depreciated over the new useful life and result is tax savings (a cash infow) of $900 per year. At the end of its useful life, you estimate the equipment can be sold for $50,000 Option Two: This option would require Widget to purchase new up-to-date equipment at a cost of $310,000. This new equipment would have an expected useful life of 8 years and result in an annual tax savings of $4,900. At the end of its useful life, it is estimated the new equipment can be sold for $135,000 Option Three: Another equipment manufacturer has provided a proposal offering to supply a competing brand. Under this proposal, Widget would purchase the equipment for $255,000. This equipment has a 9 year useful life and an estimate $100,500 salvage value with an annual tax savings of S3,500 Additional Information: In order to accommodate any of the equipment options, Widget would need to first upgrade the electrical supply capacity and the floor supports in the manufacturing building. The work would be accomplished using Widget's maintenance department at a cost of $47,550 Based on your discussions with the Maintenance Department supervisor, it is estimated that ann three options respectively The Production Department supervisor was quite excited about either upgrading their existing equipment or purchasing replacement equipment. The supervisor estimates that the upgrade to the new equipment would reduce annual labor cost by $29,000 for option 1, $17,500 for option 2 and $18,000 for option 3 The Sales Manager provided estimates of the effect on sales revenue based on the lower prices Widget can charge due to the labor cost savings. She estimates gross margin increases of S9,700, $57,000, and $39,500 per year for options 1,2, and 3 respectively . ual maintenance costs would increase by $20,000, $20,000 and $15,000 for the