Question: AP Manufacturing is deciding wether to keep or replace an old machine. It obtains the following information: Old Machine New Machine Original Cost $10,000.00 $8,000.00
AP Manufacturing is deciding wether to keep or replace an old machine. It obtains the following information: Old Machine New Machine Original Cost $10,000.00 $8,000.00 Useful Life 10 years 4 years Current age 6 years 0 years Remaining useful life 4 years 4 years Accumulated depreciation $6,000.00 Not acquired book value $4,000.00 Not acquired current disposal value (in cash) $2,500.00 Not acquired Terminal disposal value (4 years from now) $- $- Annual cash operating cost $20,000.00 $12,000.00 AP Manufacturing uses straight-line depreciation. Ignore the time value of money and income taxes. Should AP replace the old machine? Base your recommendation on both quantitative and possible qualitative considerations
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