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please show all work for thumbs up ! on the basis of these cost estimates, what is the reccomended course of action? A milling machine
please show all work for thumbs up !
on the basis of these cost estimates, what is the reccomended course of action?
A milling machine purchased by a machine tool company 12 years ago for $75,000 can be used for up to 2 more years but only if upgraded at a cost of approximately $10,000. If the milling machine is sold now, the company can get $10,000. Otherwise the estimated market values and operating costs shown below will apply. A challenger will cost $130,000 and have a maximum life of 3 years. Its market value and operating cost estimates are shown below. The machine tool company uses an interest rate of 12%/year in its economic decision making. Existing Machine Tool Proposed Replacement Year Market Value $ AOC, $/year Market Value $ AOC, $/year 1 9,000 -52,000 110,000 -30,000 5,000 -61,000 95,000 -32,000 N 3 80,000 -33,000
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