What is the difference in euac of new and existing machine

Reference no: EM13186014

A manufacturer is considering replacing a production machine tool. A new machine tool will cost $37,000 and have a life of 4 years with no salvage value, and will save the company $5000 per year in direct labor costs and $2000 per year in operating costs. The existing machine tool will last 4 more years and have no salvage value. It could be sold right now for $10,000 cash. Assume money is worth 10% and all other differences between tools are negligible. Using annual cash flow analysis, what is the difference in EUAC of the new machine vs. the existing machine?

Reference no: EM13186014

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