An asset purchased three years ago for $120000 can be replaced by a new type of equipment. The mark Show more An asset purchased three years ago for $120000 can be replaced by a new type of equipment. The market value of the old equipment is currently $54000. Its market value is expected to be $40000 and $20000 one year and 2 years from now respectively. Its operating cost was $18000 for the first 3 years of its life but the M&O cost is expected to be $23000 for the next 2 years. A new improved equipment that can be purchased for $138000 will have an economic service life of 5 years an operating cost of $9000 per year and a salvage value of $32000 after 5 years. Determine if the presently owned ma- chine should be replaced now 1 year from now or 2 years from now. (i=10%) (Hint: There are data that may not need to be used in your calculation.) Show less
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