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Special machine for polishing cars




The Shine Company installs a special machine for polishing cars at one of its outlets, on the first day of the fiscal year. The machine costs the company $20,000, and its annual cash operating costs total $15,000. The machine will have a four-year useful life and a zero terminal disposal value.;The next day, a salesperson offers the company another machine that promises to do the same job at annual cash operating costs of $9,000. The new machine will cost $24,000 cash, installed. The "old" machine is unique and can be sold outright for only $10,000, minus $2,000 removal cost. The new machine, like the old one, will have a four-year useful life and zero terminal disposal value. Revenues, all in cash, will be $150,000 annually. Other cash costs will be $110,000 annually, regardless of this decision.;For simplicity, ignore taxes and the time value of money.;Task(s);Prepare a statement of cash receipts and disbursements for each of the four years under each alternative. What is the cumulative difference in cash flow for the four years taken together?;Attachment Preview;Week 5 Assignment 1.xls Download Attachment;1a.;Statements of Cash Receipts and Disbursements;Year 1;Receipts from operations;Revenues;Deduct disbursements;Other operating costs;Operation of machine;Purchase of old machine;Purchase of... Show more


Paper#26651 | Written in 18-Jul-2015

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