You are considering the purchase of a new high-efficiency machine to replace old

Question

You are considering the purchase of a new high-efficiency machine to replace older machines now. The new machine can replace four of the older machines, each with a current market value of $600. The new machine will cost $5000 and will save the equivalent of 10,000 kWh of electricity per year. After a period of 10 years, neither option (new or old) will have any market value. If you use a before tax MARR of 25% and pay $0.075 per kilowatt-hour, would you replace the old machines today with the new one?

Explanation / Answer

i would suggest to replace the old machine with the new machine because after 10 years they will have no value first and secondly now on replacing the old machine can give a handsome amount and further the new machine it will take less maintainance charge.

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