Engineering economy Q#13

13. The Quick Manufacturing Company, a large profitable corporation, may replace a production machine tool. A new machine would cost S3700 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 S4000 4 years ago and 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 S1000 now or be kept in service for another 4 years. It would then have no 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, (a) Complete table 1 below for new machine option (10 pts) Table 1 New Machine Year BTCF MACRS ATCF Tax Dep. (b) Complete table 2 below for existing machine option (10 pts) Table 2 Existing Machine ATCF Year BTCF SL Dep. Ti Tax