A manufacturing concern employed your services to give them advice whether they should replace one of their machines or have it repaired. Ten years ago the machine cost P140,000. Repairs will cost P50,000 and will extend its usefulness for 5 more years. A new machine will cost P124,000 and will last 10 years. Annual cost for fuel, lubricants and repairs will be P7,500 more for the repaired engine than for the new one. What should be the recommended alternative and how advantageous over the other?
A manufacturing concern employed your services to give them advice whether they should replace one of their machines or have it repaired. Ten years ago the machine cost P140,000. Repairs will cost P50,000 and will extend its usefulness for 5 more years. A new machine will cost P124,000 and will last 10 years. Annual cost for fuel, lubricants and repairs will be P7,500 more for the repaired engine than for the new one. What should be the recommended alternative and how advantageous over the other?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A manufacturing concern employed your services to give them advice whether they should replace one of their machines or have it repaired. Ten years ago the machine cost P140,000. Repairs will cost P50,000 and will extend its usefulness for 5 more years. A new machine will cost P124,000 and will last 10 years. Annual cost for fuel, lubricants and repairs will be P7,500 more for the repaired engine than for the new one. What should be the recommended alternative and how advantageous over the other?
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