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Solution to P14-19 Garrison 13e

# Solution to P14-19 Garrison 13e - \$32,000 2 Item Year(s...

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Problem 14-19 (20 minutes) 1. The annual net cash inflows would be: Reduction in annual operating costs: Operating costs, present hand method . .... \$30,000 Operating costs, new machine . ................ 7,000 Annual savings in operating costs . ........... 23,000 Increased annual contribution margin: 6,000 boxes × \$1.50 per box . .................. 9,000 Total annual net cash inflows . ....................
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Unformatted text preview: \$32,000 2. Item Year(s) Amount of Cash Flows 20% Factor Present Value of Cost of the machine . .. Now \$(120,000) 1.000 \$(120,000) Replacement of parts . . 6 \$(9,000) 0.335 (3,015) Annual net cash inflows (above) . ....... 1-12 \$32,000 4.439 142,048 Salvage value of the machine . ................. 12 \$7,500 0.112 840 Net present value . ...... \$ 19,873...
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