A machine purchased three years ago for $313,000 has a current book value using straight-line depreciation of $189,000; its operating expenses are $32,000 per year. A replacement machine would cost $236,000, have a useful life of ten years, and would require $9,000 per year in operating expenses. It has an expected salvage value of $65,000 after ten years. The current disposal value of the old machine is $74,000; if it is kept 10 more years, its residual value would be $20,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Machine Purchase New Machine Total costs Should the old machine be replaced? es
A machine purchased three years ago for $313,000 has a current book value using straight-line depreciation of $189,000; its operating expenses are $32,000 per year. A replacement machine would cost $236,000, have a useful life of ten years, and would require $9,000 per year in operating expenses. It has an expected salvage value of $65,000 after ten years. The current disposal value of the old machine is $74,000; if it is kept 10 more years, its residual value would be $20,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Machine Purchase New Machine Total costs Should the old machine be replaced? es
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
9th Edition
ISBN:9781305635937
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter12: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 10P: REPLACEMENT ANALYSIS The Dauten Toy Corporation currently uses an injection molding machine that was...
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