Your company currently owns a machine that is costing you $60,000 per year. You are considering replacing it with a new machine that would have a first cost of $60,000, and annual operating costs of $30,000 per year for three years.  You have received three different estimates of the eventual salvage value of the new machine: $10,000; $15,000; and $20,000.  

If your company's minimum acceptable rate of return is 12% per year, is the decision of whether to replace the machine sensitive to the estimated salvage value?

Answer rating: 100% (QA)

Yes the decision of whether to replace the machine is sensitive to the estimated salvage value Heres ... View the full answer