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Chris Co. is considering replacing a machine that was purchased for $100,000. The machine has a current book value of $42,000 and a current market
Chris Co. is considering replacing a machine that was purchased for $100,000. The machine has a current book value of $42,000 and a current market value of $20,000. Operating costs are $19,000 per year. If the machine is kept four more years, its salvage value will be $2,000. The potential replacement machine costs $70,000 and will have a 4-year life and a $30,000 salvage value. The new machine is more efficient and should reduce operating cost by 50%. What is the total relevant cost of keeping the existing machine?
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