A company is considering replacing a machine that was bought six years ago for $50,000.

A company is considering replacing a machine that was bought six years ago for $50,000. The machine, however, can be repaired and its life extended by five more years. If the current machine is replaced, the new machine will cost $44,000 and will reduce the operating expenses by $6,000 per year. The seller of the new machine has offered a trade-in allowance of $15,000 for the old machine. If MARR is 12% per year before taxes, how much can the company spend to repair the existing machine? Choose the closest answer.(9.4)

(a) $22,371 (b) $50,628 (c) $7,371 (d) −$1,000

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Expert Solution

Rahul Sunny answered 1 year ago

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