A existing old machine has present trade value of $80,000 and remaining book value of $25,000, this old machine expected to run 3000 hours per years, if old machine is kept, the remaining book value $25,000 will be depreciated st. Line over year 1 and 2, salvage value is zero, the operating cost of old machine are $40,000 year1, $45,000 year2, $50,000 year3. And $55,000 year, the effective tax rate is 40%, with minimum DCFROR 15%, calculate the cost per hour for this machine, using breakeven analysis.

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Answer Depreciaton is on stline method for 2 years with Zero Salvage value Depreciati... View the full answer