A company is evaluating a possible replacement of an old machine that has been in use...
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A company is evaluating a possible replacement of an old machine that has been in use since it was purchased new for $40,000 on December 3, 2016. Today, however, the machine is worth $20,000. If this machine is kept, an engineer estimates that its Market Values will be $9,000 a year from now, and $8,000 two years from now. On the other hand, Operating and Maintenance Costs are expected to be $5,000 for the upcoming year (until December 3, 2022) and $6,100 for the year after (until December 3, 2023), MARR is 10% (a) The Annual Equivalent Cost if the machine is kept for one year (ie, until December 3, 2022) is $ (b) The Annual Equivalent Cost if the machine is kept for two years (ie, until December 3, 2023) is $ (c) The Economic Service Life of the machine is year(s). A company is evaluating a possible replacement of an old machine that has been in use since it was purchased new for $40,000 on December 3, 2016. Today, however, the machine is worth $20,000. If this machine is kept, an engineer estimates that its Market Values will be $9,000 a year from now, and $8,000 two years from now. On the other hand, Operating and Maintenance Costs are expected to be $5,000 for the upcoming year (until December 3, 2022) and $6,100 for the year after (until December 3, 2023), MARR is 10% (a) The Annual Equivalent Cost if the machine is kept for one year (ie, until December 3, 2022) is $ (b) The Annual Equivalent Cost if the machine is kept for two years (ie, until December 3, 2023) is $ (c) The Economic Service Life of the machine is year(s).
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New machine 40000 D Today it is worth 20000 Nex Year 9000 8000 Next tw... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Posted Date:
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