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The original cost of a machine was $50,000. This machine can be sold for $25,000 now, and its estimated market value decreases by $5,000 keeping
The original cost of a machine was $50,000. This machine can be sold for $25,000 now, and its estimated market value decreases by $5,000 keeping one more year. The modification cost to use the machine now is $5,000, and the maintaining cost of the machine is $5,000 in the first year increasing by $1,000 next four years. Minimum expected return is set to 10%. How much would be your annual saving if you hold this machine only two years instead of five years?
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