Question: Relevant Cost Analysis for Replacement Decision : A company is considering replacing an old machine with a new one. The old machine has a book

Relevant Cost Analysis for Replacement Decision: A company is considering replacing an old machine with a new one. The old machine has a book value of $20,000 and can be sold for $15,000. The new machine costs $50,000 and has annual operating costs of $5,000 less than the old machine. If the company expects to keep the machine for 5 years and has a required rate of return of 10%, determine whether the company should replace the old machine with the new one.

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