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Please show work so I know how to do this. Thanks! A company first purchased a CNC machine for $100K and has used it for
Please show work so I know how to do this. Thanks!
A company first purchased a CNC machine for $100K and has used it for 3 years. It's economic life then was estimated at 6 years with a residual value of $10K. Another vendor has offered a replacement that will have lower O&M and last 10 years. The new vendor has offered to buy your present CNC machine for $50K (it shown in the company's books as having a depreciated book value of $60K). His price for the new machine is S120K. Your O&M cost for your current machine is $5K year. The claims his CNC machine will only cost $3K year and can be sold at the end of 10 years for $ 10K. Should you replace your current machine? MARR is 10%. A business has purchased an asset it expects to last 6 years. It's initial cost is $90K with an expected salvage value at the end of 6 years of $15K. Using DDB depreciation, what is the allowed depreciation charge for each of the 6 yearsStep by Step Solution
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