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    End-of-Year Cash Flows For Continuing Use of Old Machines

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    timbulmanalu
    The document summarizes the end-of-year cash flows for continuing to use old machines versus investing in a new machine. For the old machines, the total annual costs increase each year from $390,974 to $949,741 over a 6 year period due to wage, maintenance, supply, and electricity cost increases. The new machine has a total upfront cost of $1,010,000 but generates efficiency savings and has lower total annual costs compared to the old machines, ranging from $285,841 to $1,466,306 over 7 years.

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    End-of-Year Cash Flows For Continuing Use of Old Machines

    Uploaded by

    timbulmanalu
    5 views2 pages
    The document summarizes the end-of-year cash flows for continuing to use old machines versus investing in a new machine. For the old machines, the total annual costs increase each year from $390,974 to $949,741 over a 6 year period due to wage, maintenance, supply, and electricity cost increases. The new machine has a total upfront cost of $1,010,000 but generates efficiency savings and has lower total annual costs compared to the old machines, ranging from $285,841 to $1,466,306 over 7 years.

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    79084532123-142-Fonderia

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    The document summarizes the end-of-year cash flows for continuing to use old machines versus investing in a new machine. For the old machines, the total annual costs increase each year from $390,974 to $949,741 over a 6 year period due to wage, maintenance, supply, and electricity cost increases. The new machine has a total upfront cost of $1,010,000 but generates efficiency savings and has lower total annual costs compared to the old machines, ranging from $285,841 to $1,466,306 over 7 years.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    5 views2 pages

    End-of-Year Cash Flows For Continuing Use of Old Machines

    Uploaded by

    timbulmanalu
    The document summarizes the end-of-year cash flows for continuing to use old machines versus investing in a new machine. For the old machines, the total annual costs increase each year from $390,974 to $949,741 over a 6 year period due to wage, maintenance, supply, and electricity cost increases. The new machine has a total upfront cost of $1,010,000 but generates efficiency savings and has lower total annual costs compared to the old machines, ranging from $285,841 to $1,466,306 over 7 years.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    End-of-Year Cash Flows for Continuing Use of Old Machines

    0 1 2 3 4 5 6
    Cost of Old Machines 496495
    Wage 295546 304412 313544 322951 332639 342618
    Maintenance 79128 81502 83947 86465 89059 91731
    Supplies 4000 4120 4244 4371 4502 4637
    Electricity 12300 12669 13049 13441 13844 14259
    Total 390974 402703 414784 427227 440044 949741

    Wage = $7.33 per hour x 8 hours x 12 workers x 2 shifts x 210 days per year = $295,545.6 per year
    Maintenance = $7.85 per hour x 8 hours x 3 workers x 2 shifts x 210 days per year = $79,128 per year
    Inflation rate = 3%
    Average useful life of old machines = 415807 / 47520 = 8.75 years

    End-of-Year Cash Flows for New Machine


    0 1 2 3 4 5 6 7
    Cost of New Machine 1010000
    Sale of Old Machine -130000
    Wage of Skilled Workers 38170 39315 40494 41709 42960 44249 45576
    Maintenance 59500 61285 63124 65017 66968 68977 71046
    Electricity 26850 27656 28485 29340 30220 31127 32060
    Efficiency Savings -5200 -5356 -5517 -5682 -5853 -6028 -6209
    Wage of Janitors 166522 171517 176663 181963 187422 193044 198835
    Total 880000 285841 294416 303249 312346 321717 331368 341309

    Wage = $11.36 per hour x 8 hours x 1 worker x 2 shifts x 210 days per year = $38,169.6 per year
    Wage = $4.13 per hour x 8 hours x 12 worker x 2 shifts x 210 days per year = $166,521.6 per year
    Useful life of the new machine = 8 years
    8
    1279438
    -164680
    46944
    73177
    33022
    -6395
    204801
    1466306

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