Question

Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $470,000 cost with an expected four-year life and a $21,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine.

Answer 1

There's no explicit question but based on the information you provided, the new machine will have a total cost of $470,000 and an expected life of four years. This means that the machine's annual depreciation cost will be $470,000 / 4 = $117,500 per year.

In addition to the annual depreciation cost, the company will also need to pay for the machine's out-of-pocket costs, such as maintenance and repairs. These costs will vary depending on the specific machine and how it is used.

After four years, the machine will have a salvage value of $21,000. This means that the company will be able to sell the machine for this amount after it has reached the end of its useful life. The salvage value will be deducted from the machine's total cost, resulting in a net cost of $470,000 - $21,000 = $449,000.

In summary, the company will need to pay a total of $449,000 for the new machine, including annual depreciation costs and out-of-pocket expenses. The machine will have a salvage value of $21,000 after four years.