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Should the old machine be replaced with a newer one

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Reference no: EM133093638

Question - Starbucks is considering selling its old machine and replacing it with a newer one. The old machine has a book value of $28,000, and its remaining useful life is five years. Annual costs are $15,000. Coffee Bean is willing to buy the old machine for $15,000. New equipment would cost $65,000 with annual operating costs of $4,000. The new machine has an estimated useful life of five years.

A) Should the old machine be replaced with a newer one?

B) Why (please make sure to support your answer)?

Reference no: EM133093638

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