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A company is considering replacing one of its existing machines. The existing machine is being depreciated...

A company is considering replacing one of its existing machines. The existing machine is being depreciated at $25,000 per year, and currently has a book value of $50,000. The new machine would have annual depreciation expense of $36,000 per year for five years. In an NPV analysis what depreciation expense would you assigned to the new machine? Show the depreciation expense for all five years.

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Answer #1

New depreciation Less: Old depreciation Year 1 $36,000 $25,000 Year 2 $36,000 $25,000 Year 3 $36,000 $ - Year 4 $36,000 $ - Y

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