Meadville Widgets is considering the purchase of a fully automated widget finishing machine to replace an older but still functioning but more labor

intensive model.The machine being replaced was purchased 5 years ago for a price of $45,000.00 at which time it had an expected life of 10 years.

This machine is being depreciated by the straight line method with an anticiapated salvage value of$0.00The current market value of this machine

is estimated to be $27,000.00.The current machine requires one operator with an annual cost of $37,500.00 in salary and benifits.

The replacement machine has a purchase price of $79,500, a 5 year life, and an expected salvage value of $17,000.The new machine will require

a 440 volt three phase electric service and a new concrete pad these installation expenses are $7,500.Meadville Widgetsexpect the maintence costs to be

$5,000 as compared to the current costs of $6,000 and the defects to be $2,000 compared to current defect costs of $4,000.

Before considering the purchase of the new machine Meadville Widgets conducted and engineering study to determine if the installation costs

would be prohibitive.