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please answer using formula and not with excel...thanx Question 4 Explain what is meant by Opportunity-Cost Approach Eight years ago, a firm purchased a lathe
please answer using formula and not with excel...thanx
Question 4 Explain what is meant by Opportunity-Cost Approach Eight years ago, a firm purchased a lathe for $45.000. The operating expenses for the lathe are $8,700 per year. An equipment vendor offers the firm a ne machine for $53,500. An allowance of $8.500o would be made for the old machine on the purchase of the new one. The old machine is expected to be scrapped at the end of five years. The new machine's economic service life is five years, with a salvage value of $12.000. The new machine's O&M cost is estimated to be $4,200 for the first year, increasing at an annual rate of S500 thereafte The firm's MARR is 12%, with supporting calculations, which option would you recommend? (10 marks)Step by Step Solution
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