12.11 A firm is considering replacing a machine that has been used to make a certain kind of packaging material. The new, improved machine will cost $31.000 installed and will have an estimated economic life of 10 years with a salvage value of $2,500. Operating costs are expected to be $1.000 per year throughout the service life of the machine. The old machine (still in use) had an original cost of $25,000 four years ago, and at the time it was purchased, its service life (physical life) was esti- mated to be seven years with a salvage value of $5,000. The old machine has a cur- rent market value of $7700. If the firm retains the old machine, its updated market values andopcrating osts for the next four vcars will be as oiven in Tabla P12 11

12.11 A firm is considering replacing a machine that has been used to make a certain kind of packaging material. The new, improved machine will cost $31.000 installed and will have an estimated economic life of 10 years with a salvage value of $2,500. Operating costs are expected to be $1.000 per year throughout the service life of the machine. The old machine (still in use) had an original cost of $25,000 four years ago, and at the time it was purchased, its service life (physical life) was esti- mated to be seven years with a salvage value of $5,000. The old machine has a cur- rent market value of $7700. If the firm retains the old machine, its updated market values andopcrating osts for the next four vcars will be as oiven in Tabla P12 11

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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