Marr of the company

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Eight years ago, a company purchased a lathe for $45,000. Operating expenses for the lathe are $8,700 per year. An equipment vendor offers the company a new equipment for $53,500, with operating costs of $5,700 per year. A discount of $8,500 would be made on the purchase of the new machine in exchange for the old one. The old machine is expected to be scrapped at the end of five years. The economic service life of the new machine is five years, with a salvage value of $12,000. The MARR of the company is 12%. Which option would you recommend?

Reference no: EM133132256

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