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X Company is considering replacing one of its machines in order to save operating costs. The following information is available: Current machine Current sales value
X Company is considering replacing one of its machines in order to save operating costs. The following information is available:
Current machine | |
Current sales value | $7,000 |
Final sales value | 0 |
Operating costs | 68,000 |
New machine | |
Purchase cost | $72,000 |
Final sales value | 2,500 |
Operating cost savings | 22,000 |
Both machines will last for 4 more years.
Assuming a discount rate of 4%, what is the incremental net present value of replacing the current machine with the new machine?
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