Question: Kendra Company is considering replacing an old machine. The old machine was purchased for $101.800 and has a book value of $41,800 and should last
Kendra Company is considering replacing an old machine. The old machine was purchased for $101.800 and has a book value of $41,800 and should last four more years with no salvage value. The compamy believes that it could currently sell the old machine for $21,800. The new machine cont 581,800 and wil have a 4 year life and a $11,800 salvage value, Currently, it costs $21,800 annually to operate the old machlive. The new machine is more efficient and should teduce operabing cost by 50%. Based on quantitative analysis; should Kendra Company replace the old machine? Musible cricice Yes, because the refevant cost of the new machine is $8,200 lass than the old machine. No. because the relevant cost of the now mochine is $21.800 more than the old mochine. No, bocause the relevant cost of the now machine is $4,600 more than the old machine Yes, because the relevant cost of the new machine is $18,200 less than the old machine
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