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Sala company is contemplating tin: replacement of an old machine with a new machine. The hook value of the old machine is $210,000. which includes
Sala company is contemplating tin: replacement of an old machine with a new machine. The hook value of the old machine is $210,000. which includes $90,000 worth of accumulated depreciation. It is estimated that the old machine has 10 years of useful life left, and it could be sold for $75,000. Its annual operating costs are $240,000. The new machine would cost $600.000. but it would only cost $180,600 to operate each year. Sala anticipates keeping it years. Using incremental analysis, "crunch" the numbers to determine if Sala should buy this new equipment. Show your work by setting up a comparison of the relevant numbers in the three-column format we studied in class. Would your answer change, if Sala could repair the old equipment for $50,000 and lower Us annual operation costs for current machine from $240,000 to $ 190.000
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