XYZ Manufacturing currently has production equipment that has four years of rema

Question

1. XYZ Manufacturing currently has production equipment that has four years of remaining life. The equipment was purchased a year ago at a cost of $10,000. The annul depreciation on this machine is $1,800 and its expected salvage value at the end of four years is $1,000. The old machine could be sold today for $8,000. The company has been considering the purchase of a new machine that would replace the existing one. The new equipment costs $15,000 and would increase sales by $2,000 per year and decrease operating costs by $1,000 per year. The new equipment falls into the 3-year MACRS class like (.33, .45, .15, .07) and will be worthless after four years. The company

Explanation / Answer

answer =55262

By how much would the value of the company change if it accepts the replacement project?

A.$2,112.05

B 318.27

C.-$5,887.95

D.$ 552.62answer =

E.$1,497.91

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