Question
On January 1, 2021, X Company bought a machine for $40,000. It's now January 1, 2022, and management is disappointed that 2021 operating costs
On January 1, 2021, X Company bought a machine for $40,000. It's now January 1, 2022, and management is disappointed that 2021 operating costs with the machine were $30,000. Since they are expecting future operating costs to continue to be $30,000 a year, they are considering replacing the machine with a new one. Although the new machine will cost $45,000, operating costs with the new machine will only be $22,000 each year. Both machines will last for 5 more years. The current machine can be sold immediately for $8,000 but will have no salvage value at the end of 5 years. The new machine will have a salvage value of $4,500 at the end of 5 years. Assuming a discount rate of 4%, what is the net present value of replacing the current machine with the new one? Submit Answer Tries 0/4
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