Tesla management are trying to decide whether to keep an older piece of machinery or buy...
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Tesla management are trying to decide whether to keep an older piece of machinery or buy a replacement. Management was presented with the following information to assist in their decision: The old machine was purchased three years ago for $720,000 and has a current book value using straight-line depreciation of $400,000. The old machine incurs operating expenses of $60,000 per year. The current disposal value of the old machine is $170,000; if it is kept nine more years, its remaining value would be $20,000. The replacement machine would cost $480,000 and have a useful life of nine years. . The replacement machine has an expected salvage value of $130,000 after nine years. The replacement machine would require $26,000 per year in operating expenses. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Tesla management are trying to decide whether to keep an older piece of machinery or buy a replacement. Management was presented with the following information to assist in their decision: The old machine was purchased three years ago for $720,000 and has a current book value using straight-line depreciation of $400,000. The old machine incurs operating expenses of $60,000 per year. The current disposal value of the old machine is $170,000; if it is kept nine more years, its remaining value would be $20,000. The replacement machine would cost $480,000 and have a useful life of nine years. . The replacement machine has an expected salvage value of $130,000 after nine years. The replacement machine would require $26,000 per year in operating expenses. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced?
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Heres a breakdown of the costs for each option and a recommendation for Tesla Old Machine Keep for 9 ... View the full answer
Related Book For
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
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