A company is considering replacing an old machine with a new machine that will cost $75,000. It will reduce operating expenses by $7,500 per year compared to the old machine. They expect to sell the new machine at the end of 5 years for $60,000. Alternatively, the old machine could be repaired in order to extend its useful life for five more years. The old machine can be sold today for $5,000, but it will have no resale value 5 years from now. How much can the company justify spending to repair the old machine? Assume MARR = 10% with no inflation. b. $4500 c. $5500 a. $3500 d. $6500 e. $7500

A company is considering replacing an old machine with a new machine that will cost $75,000. It will reduce operating expenses by $7,500 per year compared to the old machine. They expect to sell the new machine at the end of 5 years for $60,000. Alternatively, the old machine could be repaired in order to extend its useful life for five more years. The old machine can be sold today for $5,000, but it will have no resale value 5 years from now. How much can the company justify spending to repair the old machine? Assume MARR = 10% with no inflation. b. $4500 c. $5500 a. $3500 d. $6500 e. $7500

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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