A machine tool, which has been used in a plant for 10 years, is being considered for

Question:

A machine tool, which has been used in a plant for 10 years, is being considered for replacement. It cost $9500 and was depreciated by MACRS depreciation using a 5-year recovery period. An equipment dealer indicates that the machine has no resale value. Maintenance on the machine tool has been a problem, with an $800 cost this year. Future annual maintenance costs are expected to be higher. What is the economic life of this machine tool if it is kept in service?

Depreciation
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