
Concept explainers
Net present value is the difference between the present values of
Calculate the cost of
Decision rule:
OOG is considering to replace an asset with new one which has cost of $153,800 and old machine has book value of $8,000. Asset is classified under five years MACRS class and can be sold after five years for 10,800. Savings from the machine is increases from $70,000 to $110,000. Life of the project is 5 years, tax rate is 40% and required

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