A machine that cost $120,000 3 years ago can be sold now for $59,500. Its market value is expected to be $40,000 and $20,000 1 year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to be $23,000 for the next 2 years. A new improved machine that can be purchased for $143,500 will have an economic life of 5 years, and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year, determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now. The annual worth of the existing machine one year from now is $-[ of the existing machine two years from now is $-1 machine is $- The presently owned machine should be replaced (Click to select) the annual worth and the annual worth of the new

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Chapter1: Making Economics Decisions
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A machine that cost $120,000 3 years ago can be sold now for $59,500. Its market value is
expected to be $40,000 and $20,000 1 year and 2 years from now, respectively. Its operating
cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to be $23,000
for the next 2 years. A new improved machine that can be purchased for $143,500 will have an
economic life of 5 years, and an operating cost of $9,000 per year, and a salvage value of
$32,000 whenever it is replaced. At an interest rate of 10% per year, determine if the presently
owned machine should be replaced now, 1 year from now, or 2 years from now.
The annual worth of the existing machine one year from now is $-
of the existing machine two years from now is $-
machine is $-
Linsin
The presently owned machine should be replaced (Click to select)
the annual worth
and the annual worth of the new
Transcribed Image Text:A machine that cost $120,000 3 years ago can be sold now for $59,500. Its market value is expected to be $40,000 and $20,000 1 year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to be $23,000 for the next 2 years. A new improved machine that can be purchased for $143,500 will have an economic life of 5 years, and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year, determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now. The annual worth of the existing machine one year from now is $- of the existing machine two years from now is $- machine is $- Linsin The presently owned machine should be replaced (Click to select) the annual worth and the annual worth of the new
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