QUESTION: CAPITAL BUDGETING
A Machine purchased six years ago for $150,000 has been depriciated to a book value of $90000.It originally had a projected life of 15 years and zero salvage value.A new machine will cost $250,000 and result in a reduced operating cost of $30000 per year for the next nine years.The older machine could be sold for $50000.The cost of capital is 10%.The new machine will be depriciated on a straight line basis over nine year life with $25000 salvage value.The company's tax rate is 55%.Determine whether the old mahine should be replaced.