Komatsu Cutting Technologies is considering replacing one of its CNC machines with one that is newer and more efficient.

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Komatsu Cutting Technologies Is Considering Replacing One Of Its Cnc Machines With One That Is Newer And More Efficient 1 (19.89 KiB) Viewed 9 times

Komatsu Cutting Technologies is considering replacing one of its CNC machines with one that is newer and more efficient. The firm purchased the CNC machine 10 years ago at a cost of $135,000 The machine had an expected economic life of 12 years at the time of purchase and an expected salvage value of $12,000 at the end of the 12 years. The original salvage estimate is still good, and the machine has a remaining useful ifo of two years. The firm can sell this old machine now to another firm in the industry for $30,000 The new machine can be purchased for $165,000, including installation costs. It has an estimated useful (economic) life of eight years. The new machine is expected to reduce cash operating expenses by $30,000 per year over its eight year lide, at the end of which the machine is estimated to be worth only $5,000. The company has a MARR of 12% Click the icon to view the interest factors for discrete compounding when MARR=12% per year CHILD (a) If you decided to retain the old machine, what is the opportunity (investment) cost of retaining the old asset? The opportunity cost of retaining the old asset is $(Round to the nearest dollar) Incorrect: 0