ix. A company is thinking in replacing an existing machine. The old machine it is expected to
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Question:
ix.
A company is thinking in replacing an existing machine. The old machine it is expected to last for another four (4) years and has a market value of $3,000. Operating estimated costs are $2,000 each year. The new machine or challenger has a cost of $15,000, operating cost of $1,000 and an expected life of 10 years. The salvage value of the new machine is $5,000. Should be replaced, with an interest rate of 10%?
a. | Replace, the challenger is -$2946.41
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b. | Do not replace, the defender is -$3127.50
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c. | Replace, the defender is -$2946.41
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d. | Do not replace, the defender is -$2946.41
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Related Book For
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1111534912
8th edition
Authors: Gary A. Porter, Curtis L. Norton
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