Question
Question 1 The company Sul purchased a machine at a cost of $ 460,000 in 2014. Today (2020) it has two options: invest $ 40,000
Question 1 The company Sul purchased a machine at a cost of $ 460,000 in 2014. Today (2020) it has two options: invest $ 40,000 in the adequacy of the machine and operate for another 6 years at the end of which its residual value will be null or replace it, today, by a more modern rented machine. If it is replaced, the used machine can be sold for $ 200,000. Consider the information below:
item | keep old machine | rent new machine |
Labor ($/year) | 300.000 | 250.000 |
Material Cost ($/year) | 250.000 | 100.000 |
maintenance cost ($/year) | 8.000 | 0 |
Rent ($/year) | 0 | 260.000 |
Considering a TMA = 1.5% per month (consider monthly capitalization) What is the best option for the company?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started