Zen Manufacturing Company is considering replacing a four-year-old machine with a new, advanced model. The old machine was purchased for $60,000, has an estimated useful life of 10 years with no salvage value, and has annual maintenance costs of $15,000. The new machine would cost $45,000, but annual maintenance costs would be only $6,000. The new machine would have an estimated useful life of 10 years with no residual value. 

Using straight-line depreciation and an assumed tax rate of 40%, calculate the additional annual cash inflow if the old machine is replaced.

Answer rating: 100% (QA)

Answer i Saving in Annual Maintenance Cost by new machine 15000 6000 ... View the full answer