It consists of a quantitative problem and analysis applying the principle of "Marginal Cost-Benefit Analysis". In the space provided, show the counts that reflect  how to obtain a certain result.    The CFO of ZEBRA CORP.  asked you to evaluate a capital budgeting proposal. The firm intends to replace a machine with one that offersmore production capacity. The unit manager believes that replacing an old machine with a new one will produce total benefits of $1,200,000 over the next 5 years. The existing machine (old one) produce benefits of $750,000 over the same period. An initial cash investment of $650,000 would be required to install the new machine. Also, the manager estimates that the existing (old) machine can be sold at a price of $300,000.

 Required: 

Apply the Principle of Marginal Cost-Benefit Analysis techniques to answer the following: (SHARE COMPUTATIONS)

A. Compute the added marginal benefits forthe proposed new machine 

B. Compute the marginal added costs of the proposed new machine.

C. Compute the Net Benefit of the proposed new machine. 

D. What should you recommend the company to do? Why?

Answer rating: 100% (QA)

To compute the added marginal benefits for the proposed new machine we need to calculate the difference between the total benefits of the new machine ... View the full answer