Calculate the annual equivalent total cost for each machine

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Reference no: EM13152832

A production machine which was purchased 7 years ago for $37,000 is currently valued at $9,500. Its annual operating cost is $15,400. A new machine with identical performance is available for $25,000. Its life is estimated at 10 years, at which time the salvage value for each machine is $4,000. The annual opperating cost of the new operating machine is $7,000. The company uses a 20% MARR. Calculate the annual equivalent total cost for each machine. Would you replace the old machine at this time?

Reference no: EM13152832

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