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Please answer as soon as possible (step by step). You are considering replacing an existing machine that you purchased five years ago when it cost
Please answer as soon as possible (step by step).
You are considering replacing an existing machine that you purchased five years ago when it cost $130,000. If you keep this machine it will last for nine more years. A newer, more efficient machine that will also last for nine years could be purchased today for $260,000. If you purchased the new machine, you would sell the existing machine for only $40,000. The existing machine would cost you $90,000 per year to operate while the new machine would only cost you $40,000 per year to operate. At the end of nine years, the old machine would be worth only $10,000, while you could sell the more efficient machine for $40,000 at that time. No matter which machine you use (and you must use one of them), the revenues will be $600,000 per year. Ignore income taxes!! a. What is the Equivalent Uniform Annual Cost (EUAC) of operating the existing machine for the next nine years at 14% per annum? b. What is the equivalent Uniform Annual Cost (EUAC) of operating the newer, more efficient, machine for the next nine years at 14% per annum? c. What is the present value (at 14%) of the difference between the two EUAC's that you just computed in parts a and bStep by Step Solution
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