The Container Corporation of America is considering replacing an automatic painting machine purchased 9 years ago for $7

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answerhappygod
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The Container Corporation of America is considering replacing an automatic painting machine purchased 9 years ago for $7

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The Container Corporation of America is considering replacing anautomatic painting machine purchased 9 years ago for $700,000. Ithas a market value today of $40,000. The unit costs $350,000annually to operate and maintain. A new unit can be purchased for$800,000 and will have annual O&M costs of $120,000. If the oldunit is retained, it will have no salvage value at the end of itsremaining life of 10 years. The new unit, if purchased, will have asalvage value of $100,000 in 10 years. Using an EUAC measure and aMARR of 20% should the automatic painting machine be replaced ifthe old automatic painting machine is taken as a trade-in for itsmarket value of $40,000?
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