What would you pay at the end of year to extend the life

Reference no: EM131959060

Question: Your company needs a machine for the next seven years and you have two choices (assume an annual interest rate or 9%). Machine A costs $90.000 and has an annual operating cost of $47,000. Machine A has a useful life of seven years and a salvage value of $16.000. Machine B costs $150.000 and has an annual operating cost of $23.000. Machine 3 has a useful life of five years and no salvage value. However, the life of Machine B can be extended by two years with a certain amount of investment. If Machine B's life is extended, it will still cost S23.000 annually to operate and still have no salvage value. What would you pay at the end of year 5 to extend the life of Machine 8 by two years'?

Reference no: EM131959060

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