A machine purchased three years ago for $$304,000$ has a current book value using straight$-$line depreciation of $$187,000$; its operating expenses are $$31,000$ per year. A replacement machine would cost $$236,000,$ have a useful life of ten years, and would require $$11,000$ per year in operating expenses. It has an expected salvage value of $$69,000$ after ten years. The current disposal value of the old machine is $$80,000$; if it is kept $10$ more years, its residual value would be $$13,000.$

Required

Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced?

Total Costs $=$

Should the old machine be replaced?

Answer rating: 100% (QA)

Answer To determine whether the old machine should be replaced we need to calculate the total costs ... View the full answer