Question:

You are operating an old machine that is expected to produce a cash inflow of $$5,000$ in each

of the next $3$ years before it fails. You can replace it now with a new machine that costs

$$20,000$ but is much more efficient and will provide a cash flow of $$10,000$ a year for $4$ years.

Calculate the equivalent annual cost of the new machine if the discount rate is $15\%.$

Should you replace your equipment now?

All input values are shown in yellow. Only these values need changed to review algo versions.

Answers are displayed in red.

Assumptions and other problem notes are displayed at the very bottom.

Input variables:

Annual cash inflow

Life in years

New machine cost

New machine annual cash inflow

Life of new machine in years

Discount rate