Masha Potata, a restaurant owner, replaced an industrial size mixer less than a year ago....
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Masha Potata, a restaurant owner, replaced an industrial size mixer less than a year ago. Today, Madame Mix-a-lot Manufacturing announced the availability of a new mixer that mashes in half the time and with improved power consumption. Masha is considering the purchase of this new mixer to replace the existing one recently purchased. Selected information about the two mixers is given below:
Existing:
Original cost $624,000
Accumulated depreciation $43,200
Current salvage value $542,000
Remaining life in years: 12
Annual operating expenses $41,000
New Mixer:
Original Cost: $636,000
Accumulated Depreciation: None
Current Salvage Value: None
Remaining Life in Years: 12
Annual Operating Expenses: $33,000
Calculate the cash flow difference over the next 12 years assuming Masha purchases the new mixer and note whether the difference is a net inflow or outflow .Show your work.
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