Asked Mar 18, 2020

An asset costing $10,000 has the salvage values and operating cost shown below. Using 8%, when should the asset be replaced with an identical part?

End of Year Salvage Operating Cost
1 6000 2300
2 4000 2500
3 3200 3300
4 2500 4800
5 2000 6800
6 1800 9500
7 1700 12,000

Expert Answer

Step 1

Calculate the net cash outflow as follows:

Finance homework question answer, step 1, image 1


Finance homework question answer, step 1, image 2



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