Milling, Inc. is considering a new milling machine. The machine costs $125,000. They can received a $15,000
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Question:
Milling, Inc. is considering a new milling machine. The machine costs $125,000. They can received a $15,000 trade in allowance for the old milling machine. The new machine can be used to generate $35,500 in annual revenue. Cash operation expenses are estimated to be $14,500 per year. The machine has a useful life of 15 years and annual depreciation expense would be $9,500. The machine would require a $5,100 maintenance in year 7. The machine has an approximate salvage value of $12,300 at the end of its useful life. The company has a 10% minimum rate of return.
The present value of the $5,100 maintenance cost is?
$24,826.80
$(24,826.80)
$2,616.30
$(2,616.30)
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