Question: Indium Services, Inc., is considering replacing a machine. The following data are available: Replacement Machine $490,000 5 0 Original coot Useful life in vers Current
Indium Services, Inc., is considering replacing a machine. The following data are available: Replacement Machine $490,000 5 0 Original coot Useful life in vers Current age in years Book value Disposal value now Disposal value in 5 years Annual cash operating costs Old Machine $630,000 10 5 $350,000 $112.000 0 $98,000 0 $56,000 1) Which of these costs are sunk costs? 2) For the decision to keep the old machine, the relevant costs of keeping the old machine is: (ignore time value of money) 3) The difference between keeping the old machine and replacing the old machine is: (ignore time value of money) 4) Using the old machine, Indium was able to produce widgets at a variable cost per widget of $40. With the new machine, the widgets can be produced for a variable cost of $10. For what production and sales quantity would total costs for upgrading equal the total costs for replacing
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