Mailman Company Is Considering the Replacement of a Machine That

question 30

Essay

Mailman Company is considering the replacement of a machine that is presently used to produce its single product. The following data are available: $\begin{array}{lll}&& \text { Replacement } \\&\text { Old Machine } & \text { Machine }\\\text { Original cost } & \$ 210,000 & \$ 40,000 \\\text { Useful lif e in years } & 12 & 7 \\\text { Current age in years } & 5 & 0 \\\text { Book value } & \$ 65,000 & - \\\text { Disposal value now } & \$ 30,000 & - \\\text { Disposal value in 7 years } & 0 & 0 \\\text { Annual cash op erating } & \$ 10,000 & \$ 9,000\\ \text { costs}\end{array}$ Required:
Ignoring income taxes, prepare a cost comparison of all relevant items for the next seven years together. Indicate the best alternative for Mailman Company.

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Definitions:

Property Income

Income received by owners of property for the use of their property, such as rent.

Women

Female human beings, often referred to in contexts relating to gender-specific experiences, roles, rights, and social contributions.

Poverty Rate

The percentage of the population that lives below the national poverty line, indicating the proportion of individuals or families with income levels below what is necessary for basic living conditions.

Hispanics

Referring to people of Spanish-speaking origin or ancestry, especially those living in the United States.