A machine purchased three years ago for $311,000 has a current book value using straight-line depreciation of $180,000; its operating expenses are $39,000 per year. A replacement machine would cost $222,000, have a useful life of nine years, and would require $10,000 per year in operating expenses. It has an expected salvage value of $79,000 after nine years. The current disposal value of the old machine is $89,000; if it is kept 9 more years, its residual value would be $17,000. Required Calculate the total costs in keeping the old machine and purchasing a new machine. Should the old machine be replaced? Кеep Old Machine Purchase New Machine Total costs Should the old machine be replaced?

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A machine purchased three years ago for $311,000 has a current book
value using straight-line depreciation of $180,000; its operating
expenses are $39,000 per year. A replacement machine would cost
$222,000, have a useful life of nine years, and would require $10,000
per year in operating expenses. It has an expected salvage value of
$79,000 after nine years. The current disposal value of the old machine
is $89,000; if it is kept 9 more years, its residual value would be
$17,000.
Required
Calculate the total costs in keeping the old machine and purchasing a
new machine. Should the old machine be replaced?
Кеep Old
Machine
Purchase New
Machine
Total costs
Should the old machine be replaced?
Expand
Transcribed Image Text

A machine purchased three years ago for $311,000 has a current book value using straight-line depreciation of $180,000; its operating expenses are $39,000 per year. A replacement machine would cost $222,000, have a useful life of nine years, and would require $10,000 per year in operating expenses. It has an expected salvage value of $79,000 after nine years. The current disposal value of the old machine is $89,000; if it is kept 9 more years, its residual value would be $17,000. Required Calculate the total costs in keeping the old machine and purchasing a new machine. Should the old machine be replaced? Кеep Old Machine Purchase New Machine Total costs Should the old machine be replaced?

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