A steel construction company has one unit of production machinery purchased 5 years ago at a price of with a price of 120,000, projected technical life of 10 years with a residual value of 20,000. The production machine generates an average income of 25,000/year with an average operating cost of Rp 8,000. Currently a new machine with more advanced technology is available, the estimated price is 150,000. If the company purchases an advanced technology machine, it is estimated that the production will increase
A steel construction company has one unit of production machinery purchased 5 years ago at a
Please describe:
a. Cash flow diagram of the two alternatives
b. Evaluate and determine the best option if the interest rate is 8%/year.
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