Describe should the machine be purchased now

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Seven years ago a vertical drill was purchased for $10,000. Drill had 12 years of expected life and zero estimated value at the end of that period. The current market value of the drill is $1,000. The new drill's total investment cost would be $12,000. Over the five years this machine would expand sales from $10,000 to $11,500 per year and cut annual operating costs from $7,000 to $5,000. The machine has a salvage value of $2,000 at the end of 5-year period. If company's MARR is 15%, should the machine be purchased now?

Reference no: EM13199697

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