Question
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $66,000 per year;
X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $66,000 per year; operating costs with the new machine are expected to be $49,000 per year. The new machine will cost $70,000 and will last for 6 years, at which time it can be sold for $4,000. The current machine will also last for 6 more years but will have zero salvage value. Its current disposal value is $4,000. Assuming a discount rate of 8%, what is the net present value of replacing the current machine? [Note: For the capital budgeting questions, use the Present Value tables in the Coursepack or with the link after the last question A: $12,915 B: $15,111 C: $17,680 D: $20,685 E: $24,202 F: $28,316
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started