80.2K

Verified Solution

Link Copied!

, i Data Table - Old Oven $ 20,000 $ 6,700 Original cost Accumulated depreciation Book value Current disposal value Installation cost Annual operating cost Useful life New Oven 41,000 Not acquired yet Not acquired yet Not acquired yet 2.100 13,000 $ $ 28,000 21,000 Not applicable $ 17,000 $ 10 years 2 years 8 years 0$ Current age 8 years O years 8 years Remaining useful life Terminal disposal value (in 8 years) $ 0 Ba Print Done ns OTTEET pamer Keep old oven New oven y number in the input fields and then continue to the next question Question Hel Buttercup Bakery is thinking about replacing the convection oven with a new, more energy efficient model. Information related to the old and new ovens follows: Click the icon to view the information related to the old and new ovens.) Read the requirements Requirement 1 and 2. Which of the costs and benefits above are relevant to the decision to replace the oven? What information is irrelevant? Why is it irrelevant? Begin by determining whether each item is relevant or irrelevant for this decision. If an item is irrelevant, select why it is irrelevant. (Make a selection for each dem in Old Oven and New Oven columns. In the "Why trrelevant" column, only make a selection for irrelevant tors. For relevant toms, leave the input field blank do not select a label) Old Oven New Oven Why Irrelevant Original cost Accumulated depreciation Book value Current disposal value Installation cost Annual operating cost Terminal disposal value Requirement 3. Should Buttercup Bakery purchase the new oven? Provide support for your answer. Begin by selecting the relevant items and then entering the appropriate cost in each respective column. Be sure to total the relevant costs. (If an input field is not used in the table, leave the input field empty, do not enter a zero. Use a minus sign or parentheses for any costs) Keep old oven New oven Choose from any list or enter any number in the input fields and then continue to the next question Requirement 3. Should Buttercup Bakery purchase the new oven? Provide support for your answer Begin by selecting the relevant items and then entering the appropriate cost in each respective column. Be sure to total the relevant costs. (If an input field is not used in the tablo, leave the input field empty, do not enter a zero. Use a minus sign or parentheses for any costs.) Keep old oven Total New oven Total I Total relevant costs Based on the calculations above, Buttercup Bakery purchase the new oven Total relevant costs Based on the calculations above, Buttercup Bakery purchase the new oven Requirement 4. Is there any conflict between the decision model and the incentives of the manager who has purchased the old oven and is considering replacing only 2 years later? Requirement 5. At what purchase price would Buttercup Bakery be indifferent between purchasing the new oven and continuing to use the old oven? Buttercup Bakery would be indifferent between purchasing the new oven and keeping the old oven at a purchase pce of Choose from any list or enter any number in the input fields and then continue to the next question Save for Later -earch AI

Answer & Explanation Solved by verified expert

See Answer