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Business, 17.04.2021 16:10 justicejesusfreak

A machine purchased three years ago for $360,000 has a current book value using straight-line depreciation of $200,000; its operating expenses are $30,000 per year. A replacement machine would cost $240,000, have a useful life of nine years, and would require $13,000 per year in operating expenses. It has an expected salvage value of $65,000 after nine years. The current disposal value of the old machine is $85,000; if it is kept 9 more years, its residual value would be $10,000. Required:
a. Calculate the total costs in keeping the old machine and purchase a new machine.
Old machine New Machine
Total cost :
b. Should the old machine be replaced?
Yes
No

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