Ruston Ironworks Ruston Ironworks is considering a proposal to sell an existing lathe and purchase a new computeroperated lathe. Information on the existing lathe and the computer-operated lathe follow: Existing lathe Computer-operated lathe Cost $100,000 $300,000 Accumulated depreciation 60,000 0 Salvage value now 20,000 Salvage value in 4 years 0 60,000 Annual depreciation 10,000 75,000 Annual cash operating costs 200,000 50,000 Remaining useful life 4 years years Refer to Ruston Ironworks. What is the payback period for the computer-operated lathe? a. 1.87 years 2.00 years 3.53 years 3.29 years Refer to Ruston Ironworks. If the company uses 10 percent as its discount rate, what is the net present value of the proposed new lathe purchase? Present value tables or a financial calculator are required. $236,465 $256,465 $195,485 $30,422

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Ruston Ironworks Ruston Ironworks is considering a proposal to sell an existing lathe and purchase a new computeroperated lathe

Accounting Mar 15, 2021

Ruston Ironworks

Ruston Ironworks is considering a proposal to sell an existing lathe and purchase a new computeroperated lathe. Information on the existing lathe and the computer-operated lathe follow:

	Existing lathe	Computer-operated lathe
Cost	$100,000	$300,000
Accumulated depreciation	60,000	0
Salvage value now	20,000
Salvage value in 4 years	0	60,000
Annual depreciation	10,000	75,000
Annual cash operating costs	200,000	50,000
Remaining useful life	4 years	years

Refer to Ruston Ironworks. What is the payback period for the computer-operated lathe?

a. 1.87 years

1. 1. 2.00 years
  2. 3.53 years
  3. 3.29 years
Refer to Ruston Ironworks. If the company uses 10 percent as its discount rate, what is the net present value of the proposed new lathe purchase? Present value tables or a financial calculator are required.
1. 1. $236,465
  2. $256,465
  3. $195,485
  4. $30,422

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