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A company purchased a new copy machine

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Four years ago a company purchased a new copy machine. Due to deterioration, soon a new copy machine will be needed. The annual maintenance cost for the existing machine is $1,600 and increasing 100 each year. An identical copy machine can be purchased now to replace the presently owned assets. The presently owned copy machine losses each year $10,000 in resale value, compare the assets with at 10% per year and compute when the presently owed should be replace.

????Same model as presently owned

Present value (when new)??? $75,000
Present value of new copy machine? $85,000
Annual cost (old copy machine)?? 1,100
Annual cost (new copy machine)?? 1,600 and increasing?
Salvage value (both machine)?? 15,000
Life in years?(both machine)?? 6?

Reference no: EM13506502

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