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Question: your company needs a machine for the next seven years...

Question details

Your company needs a machine for the next seven​ years, and you have two choices​ (assume an annual interest rate of 6​%).

Machine A costs ​$140,000 and has an annual operating cost of ​$46,000. Machine A has a useful life of seven years and a salvage value of ​$8,000.

Machine B costs ​$180,000 and has an annual operating cost of ​$24,000. Machine B has a useful life of five years and no salvage value.​ However, the life of Machine B can be extended by two years with a certain amount of investment. If Machine​ B's life is​ extended, it will still cost ​$24,000 annually to operate and still have no salvage value.

What would you pay at the end of year 5 to extend the life of Machine B by two​ years?

You should pay ​$________.​(Round to the nearest​ dollar.)

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