Company is thinking in replacing an existing machine

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Reference no: EM131452849

A company is thinking in replacing an existing machine. The old machine it is expected to last for another four (4) years and has a market value of $3,000. Operating estimated cost are $2,000 each year. The new machine or challenger has a cost of $15,000 , operating cost of $1,000 and an expected life of 10 years. The salvage value of the new machine is $5,000. Should be replaced,with an interest of 10%?

A) do not replace, defender is -$2946.41

B) replace, the defender is -$2946.41

C) do not replace , the defender is -$3127.50

D) replace , the challenger is -$2946.41

Reference no: EM131452849

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