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Standard Machine Parts Ltd makes specialized machine parts for several customers, all of whom are major manufactures. Standard is considering replacing one of the

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Standard Machine Parts Ltd makes specialized machine parts for several customers, all of whom are major manufactures. Standard is considering replacing one of the special machines used in production of a specific product. Estimates for the next three years are as follows: Average Annual Sales Annual Operating costs BV of old machine List Price New machine Old Machine New Machine $240,000.00 $260,000.00 $ 50,000.00 $ 47,500.00 $ 7,000.00 $ 75,000.00 Remaining life Expected life Disposal value now 3 years 3 years $12,000 $0 Disposal value in 3 years Required: $0 Based strictly on the financial information presented above, should Standard Machine Parts Ltd. replace the old machine now? (Ignore time value of money). 4 Marks

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