Songo currently uses a manufacturing machine that costs $6,500 per year to operate. The machine originally...
Songo currently uses a manufacturing machine that costs $6,500 per year to operate. The machine originally cost $12,000 and had a 10 year useful life. The machine is currently 7 years old, after the remaining 3 years, the machine will be disposed of for $5,000. They have the option of purchasing a new machine for $15,000, which also has a useful life of 10 years, but it only costs $2,000 to operate per year. If Songo were to scrap the old machine today, they would earn $7,000.
A)What is the net result, over the remaining 3 years, of keeping the old machine? (round to nearest dollar, no dollar sign, use - to indicate a negative result)
B)What should Songo do?
| a. |
keep the machine |
|
| b. |
replace the machine |
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