Solution-Should Standard Machine Parts Ltd replace the old

Should Standard Machine Parts Ltd replace the old machine

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Reference no: EM132860818

Question - Standard Machine Parts Ltd makes specialized machine parts for several customers, all of whom are major manufactures. Standard is considering replacing one of the special machines used in production of a specific product Estimates for the next three years are as follows:

Old Machine New Machine

Average Annual Sales $240,000.00 $280,000.00

Annual Operating costs $50,000.00 47,500.00

BV of old machine $7,000.00

List Price New machine $75,000.00

Remaining life 3 years

Expected life 3 years

Disposal value now $12,000

Disposal value in 3 years $0 $0

Required - Based strictly on the financial information presented above, should Standard Machine Parts Ltd. replace the old machine now? (Ignore time value of money)

Reference no: EM132860818

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Should Standard Machine Parts Ltd replace the old machine

Reference no: EM132860818

Reference no: EM132860818

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