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What is the termination value ( TV ) for the analysis of replace 1 year later for the following example? You are facing the decision
What is the termination value TV for the analysis of replace year later for the following example?
You are facing the decision of whether to replace an old machine at your factory. The remaining book value of the old machine as of today is $ A new machine will cost $ to purchase it now and the yearly maintenance expenses will be $ a year. The new machine has a life of years at which time it is estimated it can be sold for $ The new machine will be depreciated down to zero over years using straightline depreciation. If the new machine is purchased, the old machine can be sold today for $ However, if the old machine is not replaced today, it will continue to be depreciated down to zero using straightline method over its remaining years. It is estimated that the old machine can be sold for $ in one year at the end year The maintenance cost per year for the old machine will be $ Assume that the discount rate is and the tax rate is
In answering the question, round to nearest dollar and do not use the dollar $ sign; do not enter decimals. For example if your answer is $ then enter ; if answer is $ then enter ; if the answer is $ then enter
The TV for the replace year later is
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