Question
An asset purchased three years ago for $120,000 can be replaced by a new type of equipment. The market value of the old equipment is
An asset purchased three years ago for $120,000 can be replaced by a new type of equipment. The market value of the old equipment is currently $54000. Its market value is expected to be $40000 and $20000 one year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 equipment that can be purchased for $138,000 will have an economic service life of 5 years, an operating cost of $9000 per year, and a salvage value of $32000 after 5 years. Determine if the presently owned machine should be replaced now, 1 year from now or 2 years from now. Assume i =10%. SHOW ALL YOUR WORK PLEASE NOT USING SPREADSHEET.
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