please answer within 30 mins in details. 3. Justco currently uses an older piece of equipment to manufacture wooden porch swings. This equipment is expected to last only two more years and hasa net book value of $200,000 and zero salvage value. The company is considering either upgrading its current equipment or purchasing new equipment. Ifthe current equipment is upgraded, Justco expects to spend $4 million. The upgraded equipment will last five years, have an expected residual value of$400,000 at that time, and is expected reduce variable manufacturing costs from $200 per swing to $180 per swing. Alternatively, the company couldpurchase new equipment for $12 million. The new equipment will also last five years, have an estimated salvage value of $800,000, and reduce variablemanufacturing coast to $160 per swing. If Justco expects sales to average 100,000 units per year, answer the following questions.1. What are the relevant costs in this decision?2. Should Justco upgrade its equipment or replace it? Show all of your calculations.3. Assume that the expected annual sales are not known, what is the breakeven point between the two approaches in annual units sold?

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1. What are the relevant costs in this decision? 2. Should Justco upgrade its equipment or replace it? Show all of your calculations. 3. Assume that the expected annual sales are not known, what is the breakeven point between the two approaches in annual units sold?

1. What are the relevant costs in this decision? 2. Should Justco upgrade its equipment or replace it? Show all of your calculations. 3. Assume that the expected annual sales are not known, what is the breakeven point between the two approaches in annual units sold?

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter12: Cash Flow Estimation And Risk Analysis

Section: Chapter Questions

Problem 10P: Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6...

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Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

please answer within 30 mins in details.

3. Justco currently uses an older piece of equipment to manufacture wooden porch swings. This equipment is expected to last only two more years and has
a net book value of $200,000 and zero salvage value. The company is considering either upgrading its current equipment or purchasing new equipment. If
the current equipment is upgraded, Justco expects to spend $4 million. The upgraded equipment will last five years, have an expected residual value of
$400,000 at that time, and is expected reduce variable manufacturing costs from $200 per swing to $180 per swing. Alternatively, the company could
purchase new equipment for $12 million. The new equipment will also last five years, have an estimated salvage value of $800,000, and reduce variable
manufacturing coast to $160 per swing. If Justco expects sales to average 100,000 units per year, answer the following questions.
1. What are the relevant costs in this decision?
2. Should Justco upgrade its equipment or replace it? Show all of your calculations.
3. Assume that the expected annual sales are not known, what is the breakeven point between the two approaches in annual units sold?

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