A machine purchased three years ago for $309,000 has a current book value using
ID: 2448646 • Letter: A
Question
A machine purchased three years ago for $309,000 has a current book value using straight-line depreciation of $187,000; its operating expenses are $37,000 per year. A replacement machine would cost $238,000, have a useful life of ten years, and would require $11,000 per year in operating expenses. It has an expected salvage value of $65,000 after ten years. The current disposal value of the old machine is $76,000; if it is kept 10 more years, its residual value would be $12,000.
Calculate the total costs in keeping the old machine and purchase a new machine.
A machine purchased three years ago for $309,000 has a current book value using straight-line depreciation of $187,000; its operating expenses are $37,000 per year. A replacement machine would cost $238,000, have a useful life of ten years, and would require $11,000 per year in operating expenses. It has an expected salvage value of $65,000 after ten years. The current disposal value of the old machine is $76,000; if it is kept 10 more years, its residual value would be $12,000.
Explanation / Answer
A machine purchased three years ago for $309,000 has a current book value using
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