Digital image processing machine three years

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Duluth purchased a digital image processing machine three years ago at a cost of $50,000. The machine has a remaining life of five years with a salvage value of $5000 at the end of the five years. The old machine is having difficulty handling the increased business volume, so the company is considering replacing the machine A new machine can be purchased for $75,000 including installation costs. Over the five year life the new machine will reduce operating expenses by $30,00 per year. Sales are not expected to change (increase) with the new machine. At the end of its useful life the new machine is estimated to the worthless. The old machine can be sold today for $10,000 The firm's MARR is 15%. Assuming the economic service life for the new machine, as well as the remaining useful life of the old machine is five years, should the company replace the defender now?

Reference no: EM131562442

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