Question
A company bought a piece of equipment for $ 60,000 five years ago. Such equipment is expected to have the commercial values and annual operating
A company bought a piece of equipment for $ 60,000 five years ago. Such equipment is expected to have the commercial values and annual operating costs indicated below for the remainder of its maximum useful life of three years. It could now be sold with a market value of $ 15,000, commercial value for year 1 $ 10,000, for year 2 $ 7,000, for year 3 $ 4,000 and with a CAO of year 1 $ 60,000, year 2 $ 65,000 and year 3 $ 70,000. A replacement computer with new technology costs $ 150,000 and has a salvage value of $ 30,000 after its five-year life, and a COA of $ 37,000 per year. With an interest rate of 10% per year, determine how many more years should the company keep the current equipment?
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