Arnold Company Is Acquiring a New Machine with a Life

question 64

Multiple Choice

Arnold Company is acquiring a new machine with a life of 5 years for use on its production line. The following data relate to this purchase: $\begin{array}{lr}\text { Cost of new machine } & \$ 100,000 \\\text { Annual cost savings in cash expenses } &&45,000 \\\text { Terminal value } & 8,000 \\\text { Maintenance required in the 4th year } &5,000 \\\text { Book value of the old machine } & 20,000\end{array}$ The new machine would replace an old fully-amortized machine. The old machine can be sold for $15,000 at the time the new equipment is acquired. The income tax rate is 30%, and the discount rate is 12%. Arnold uses the straight-line method for amortization on all machines (ignore the half-year convention) . Note: some amounts are rounded.
The present value of the total savings (excluding the maintenance in year 4) in annual cash operating costs is:

• A) $48,667.50
• B) $162,225.00
• C) $113,557.50
• D) $50,167.50

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Individuals within an organization who advocate for positive change while balancing the need to fit within the existing corporate culture.

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The use of direct or indirect pressure to influence someone's decisions or actions.