Determine the total cost for repairing machine

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Question - Williams Auto has a machine that installs tires. The machine is now in need of repair. The machine originally cost $11,100 and the repair will cost $2,100, but the machine will then last two years. The labor cost of operating the machine is $0.60 per tire.

Instead of repairing the old machine, Williams could buy a new machine at a cost of $6,100 that would also last two years; the labor cost would then be reduced to $0.40 per tire. Williams expects to install 11,100 tires in the next two years.

Determine the total (two-years) cost for both repairing and replacing the machine. Which option is better?

Reference no: EM133161498

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