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Exercise 13-18A (Algo) Asset replacement decision LO 13-5 A machine purchased three years ago for $317,000 has a current book value using straight-line depreciation of
Exercise 13-18A (Algo) Asset replacement decision LO 13-5 A machine purchased three years ago for $317,000 has a current book value using straight-line depreciation of $192,000; its operating expenses are $40,000 per year. A replacement machine would cost $228,000, have a useful life of ten years, and would require $11,000 per year in operating expenses. It has an expected salvage value of $76,000 after ten years. The current disposal value of the old machine is $87,000; If it is kept 10 more years, its residual value would be $19,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Answer is complete but not entirely correct. Keep old Purchase Machino Now Machine Total costs $ 68,000 $ 152,000 Should the old machine be Yes replaced
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