The firm bought a machine for 26041 TL 3 years ago. The machine, which has an economic life of 7 years, has no scrap value at the end of its life. The annual operating cost for this machine (1 year from now = in the 4th year of its economic life) starts with 3106 TL and decreases by 437 TL each year compared to the previous year. This machine; It is desired to be renewed with a new machine with an initial cost of 23129 TL and annual operating expenses of 1752 TL. The economic life of the new machine is 5 years and its scrap value at the end of its economic life is 10316 TL. For KEMKO = 5%; It was determined that the machine should be renewed with the comparative use value method and current value calculation. 

What should be the minimum current book value of the machine to be renewed in order to require renewal?

Answer rating: 100% (QA)

Cash flow of the new machine is shown below Year 0 1 2 3 4 5 Initial cost 23129 Operating cost 1752 ... View the full answer