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Replcement Project: KFUPM is planning to replace it heavy duty printing machine with a newer model that is faster and better quality. The existing machine
Replcement Project: KFUPM is planning to replace it heavy duty printing machine with a newer model that is faster and better quality. The existing machine has a life of 5 years and 2 years of them has passed. Now KFUPM is evaluating replacing this machine with the newer model which has a life of 3 years. KFUPM hired analyze the proposed replacement and you collected the below information. New Machine: Life of machine: 3 years The cost of the new machine is SAR 1,193 The machine will increase the gross profit every year by SAR 300 The market value of the machine when sold at the end of its life is SAR 180 If replaced, then the net working capital (NOWC) will increase every year by SAR 18 KFUPM will recover all investments in working capital at the end of the new machine's life (after 3 years). Replcement Project: KFUPM is planning to replace it heavy duty printing machine with a newer model that is faster and better quality. The existing machine has a life of 5 years and 2 years of them has passed. Now KFUPM is evaluating replacing this machine with the newer model which has a life of 3 years. KFUPM hired analyze the proposed replacement and you collected the below information. New Machine: Life of machine: 3 years The cost of the new machine is SAR 1,193 The machine will increase the gross profit every year by SAR 300 The market value of the machine when sold at the end of its life is SAR 180 If replaced, then the net working capital (NOWC) will increase every year by SAR 18 KFUPM will recover all investments in working capital at the end of the new machine's life (after 3 years)
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