Komatsu Cutting Technologies is considering replacing one of its CNC machines with one that is newerand more efficient. The firm purchased the CNC machine 10 years ago at a cost of $150,000. Themachine had an expected economic life of 12 years at the time of purchase and an expected salvagevalue of $12,000 at the end of the 12 years. The original salvage estimate is still good, and the machinehas a remaining useful life of 2 years. The firm can sell this old machine now to another firm in theindustry for $35,000. A new machine can be purchased for $175,000, including installation costs. It hasan estimated useful (economic) life of 8 years. The new machine is expected to reduce the cashoperating expenses by $30,000 per year over its 8-year life, at the end of which the machine isestimated to be worth only $5000. The company has a MARR of 12%. The asset is classified as a Class 43Property with a CCA rate of %30. The firm's marginal tax rate is 40%.Compute the cash flows associated with retaining the old machine in years 1 to 2.

has a remaining useful life of 2 years. The firm can sell this old machine now industry for $35,000. A new machine can be purchased for $175,000, includir an estimated useful (economic) life of 8 years. The new machine is expected operating expenses by $30,000 per year over its 8-year life, at the end of whi estimated to be worth only $5000. The company has a MARR of 12%. The ass Property with a CCA rate of %30. The firm's marginal tax rate is 40%.

has a remaining useful life of 2 years. The firm can sell this old machine now industry for $35,000. A new machine can be purchased for $175,000, includir an estimated useful (economic) life of 8 years. The new machine is expected operating expenses by $30,000 per year over its 8-year life, at the end of whi estimated to be worth only $5000. The company has a MARR of 12%. The ass Property with a CCA rate of %30. The firm's marginal tax rate is 40%.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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