With cost of repairs and adjustments estimated

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One year ago a machine was purchased at a cost of $2,000, to be useful for five (5) years. However the machine failed to perform properly and has cost $200 per month for repairs, adjustments, and shut-downs. A new machine designed to perform the functions desired is quoted at $3,500, with cost of repairs and adjustments estimated to be $50 per month, for its useful life of five (5) years. Except for repairs and adjustments, the operating costs for the two machines are substantially equal. With interest at 8%, show whether it is economical to purchase the new machine.

Reference no: EM13830792

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