Oscar Clemente (Problem 14–33) is still assessing the problem of whether to acquire LSI’s assembly machine. He learns that the new machine could be acquired next year, but if he waits until then, it will cost 15 percent more. The salvage value would still be $500,000. Other costs or revenue estimates would be apportioned on a month-by-month basis for the time each machine (either the current machine or the machine Oscar is considering) is in use. Fractions of months may be ignored. Ignore taxes.
Required
a. When would Oscar want to purchase the new machine if he waits until next year?
b. What are the costs that must be considered in making this decision?