Identifying cash flows (LO 1) Mighty Vita produces a wide range of herbal supplements sold nationwide through independent distributors. In response to an increasing demand for its products, the company is considering the purchase of a new packaging machine to replace the seven-year-old machine currently in use. The new machine will cost $160,000, and installation will require an additional $15,000. The machine has a useful life of 10 years and is expected to have a salvage value of $8,000 at that time. The variable cost to operate the new machine is $10 per carton compared to the current machine's variable cost of $10.10 per carton, and Mighty Vita expects to pack 250,000 cartons each year. If the new machine is purchased, Mighty Vita will avoid a required $11,050 overhaul of the current machine in three years. The current machine has a market value of $12,850. Identify the amount and timing of all cash flows related to the acquisition of the new packaging machine. Cash Flow Timing Amount Purchase price $ Installation Salvage of old equipment Salvage of new equipment Variable cost savings Avoided overhaul

Mighty Vita

Cashflow and timing

Year 0. Machine cost = -$160,000 (outflow)

Year 0. Set up costs = -$15,000 (outflow)

Year 0. Salvage of Old equipment = $12,850 (inflow)

Year 3. Savings on Overhaul of old machine = $11,050 (inflow)

Year 1 - 10. Variable Costs Savings = ($0.10 x 250,000) = $25,000 (inflow)

Year 10. Salvage value = $8,000 (inflow)

steering wheels are always situated on the left side of the car.

always drive on the right side of the road.

white lines separate lanes of traffic traveling the same direction.

hashed or broken lines means you may change lanes when it is safe.

solid white lines mean stay in your lane.

yellow lines separate traffic moving in opposing directions.

hashed or broken yellow lines mean you can carefully pass, paying attention to oncoming traffic.

never cross a solid yellow line (or double yellow line).

when turning left at an intersection, pass in front of any cars that are turning left from the opposing direction (do not try to pass behind them).

use the left lane to pass other cars traveling your direction.

do not pass in the right lane unless absolutely necessary.

if you are driving in the far left hand lane and someone would like to pass you, move over to the right lane when it is safe to do so and allow them to pass.

you must always yield to pedestrians.

come to a complete stop whenever you see pedestrians trying to cross the street.

never pass a school bus if it has flashing red lights. wait until the lights have stopped.

be aware of bicyclists. often they share the road with cars and are supposed to also follow general traffic laws.

be particularly careful about driving in cities with bike lanes -- always check before turning that a bike is not coming.

it is mandatory to pull over or stop at an intersection to allow an emergency vehicle to pass you if you see one traveling with lights flashing and/or a siren running.

do not overuse your car horn. horns are used almost exclusively for emergency situations or for when you feel unsafe.

explanation:

the answer is a.

by: nicholas dooley