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What is the incremental net present value of buying machine

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Question - X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $66,000 per year; operating costs with the new machine are expected to be $37,000 per year. The new machine will cost $48,000 and will last for five years, at which time it can be sold for $2,500. The current machine will also last for five more years but will not be worth anything at that time. It cost $32,000 three years ago but is currently worth only $5,000. Assuming a discount rate of 5%, what is the incremental net present value of buying the new machine instead of keeping the current machine?

Reference no: EM133061077

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