(Ignore income taxes in this problem.) Your Company has some equipment that can either be repaired right now for $50,000 or sold for $13,000 scrap value. As an alternative, Your Company could buy new equipment for $150,000. Both pieces of equipment would last 8 years. The annual operating expenses of the new equipment would be $8,500 less than the operating costs of the old machine. In addition, the new machine would be able to produce 100 more units that can be sold for a contribution margin of $65 per unit. The new equipment is expected to have a $10,000 salvage value in 8 years. Your Company discount rate is 8%. What is the net present value of the decision to buy the new equipment instead of repairing the old equipment? a $4,605 b $3,225 c $1,605 d ($ 795)
(Ignore income taxes in this problem.) Your Company has some equipment that can either be repaired right now for $50,000 or sold for $13,000 scrap value. As an alternative, Your Company could buy new equipment for $150,000. Both pieces of equipment would last 8 years. The annual operating expenses of the new equipment would be $8,500 less than the operating costs of the old machine. In addition, the new machine would be able to produce 100 more units that can be sold for a contribution margin of $65 per unit. The new equipment is expected to have a $10,000 salvage value in 8 years. Your Company discount rate is 8%. What is the
| a |
$4,605 |
|
| b |
$3,225 |
|
| c |
$1,605 |
|
| d |
($ 795) |
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