Assume the remaining useful life of the current machinery

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Five years ago, XYZ, Inc. installed production machinery at a cost of $25,000. At that time initial yearly costs were estimated at $1,250, in cr easing by $500 each year. The market value of this machinery each year would be 90% of the previous year’s value. There is a new machine available now that has a first cost of $27,900 and no yearly costs over its 5 year-minimum cost life. If XYZ, Inc. uses an 8% before-tax MARR, when, if at all, should they replace the existing machinery with the new unit? Assume the remaining useful life of the current machinery is 5 years. Please round to the nearest dollar.

Reference no: EM13771610

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