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Syarikat UBX Holdings is considering replacing an existing metal stamping machine with a new model which will increase earnings before depreciation from RM20,000 per year
Syarikat UBX Holdings is considering replacing an existing metal stamping machine with a new model which will increase earnings before depreciation from RM20,000 per year to RM51,000 per year. The new machine will cost RM100,000 and have an estimated life of 8 years, with no salvage value. The corporate tax is 40%, and cost of capital is 12%. The old machine has been fully depreciated and has no salvage value. Should you replace the old machine?
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