Will you suggest buying the new machine

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Question - ATP Pty Ltd purchased a machine 2 years ago cos1ing them $75,000. The machine had a useful life of 12 years and has no salvage value at the end of the life. The machine's current market value is $30,000. Company wants to upgrade to a new model, and the cost of buying a new machine would be $170,000 and useful life is 10 years. Sales will increase from $150,000 to $180,000 per annum, while operating costs will remain the same at $120,000 per annum. Assuming the cost of capital is 10% per annum, will you suggest buying the new machine?

Reference no: EM132967978

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