ElectroMotion Corp is an electric vehicle manufacturer that produces fuel-cell powered passenger cars and trucks. The company has developed a new production line machine that has considerably improved the efficiency of the firm’s existing manufacturing process. The cost of buying the new machine is £20,000 irrespective from when you buy it, and its economic useful life is 3 years. The existing production line machine will last at most 2 more years. The annual operating costs of the two machines are given below.
a) When should the company replace the existing machine with a new one?
b) Interpret your result in question (a).
For the annual operating costs of the rwo machines, please refer to the picture attached below.
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