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A firm is presently using a machine that has a market value of $11000 to do a specialized production job. The requirement for this operation is expected to last only 6 years more after which it

A firm is presently using a machine that has a market value of $11,000 to do a specialized production job. The requirement for this operation is expected to last only 6 years more, after which it will no longer be done. The predicted costs and salvage values for the present machine are: Year 1 2 3 4 5 6 Operating cost $1,500 $1,800 $2,100 $2,400 $2,700 $3,000 Salvage value 8,000 6,000 5,000 5,000 3,000 2,000 A new machine has been developed that can be purchased for $17,000 and has the following predicted cost performance. Year 1 1 2 3 4. 5 6 Operating cost $1,000 $1,100 $ 1,200 $1,300 $1,400 $1,500 Salvage value 13,000 11,000 10,000 9,000 8,000 7,000 If interest is at 0%, when should the new machine be purchased?

Aug 17 2020 View more View Less

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