Engineering economics

The Quick Company, a large profitable corporation, may replace a production machine tool. A new machine would ring a cost $3700 now, have a 4-year useful and depreciable life, and have no salvage value. For tax purposes. MACRS depreciation would be used for the new machine. The existing machine tool cost $4000 4 years could be has been depreciated by straight-line depreciation assuming an 8-year life and no salvage value. The tool could be sold to a used equipment dealer for $1000 now or be kept in service for another 4 years. It would then have salvage value. The new machine tool would save about $900 per year in operating costs compared to the existing machine. Assume a 40% combined state and federal tax rate. Complete table 1 below for new machine option Complete table 2 below for existing machine option