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  3. 2. ) a company is considering whether to overhaul

2. ) A company is considering whether to overhaul or replace a machine. The machine...

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2. ) A company is considering whether to overhaul or replace a machine. The machine was purchased four years ago and was overhauled two years ago A new machine costs $2000.00 and an overhaul costs $500.00 and lasts two years. Experience indicates that annual operating costs increase with time owing to increased maintenance charges. Table 1 shows operating costs for new and overhauled machines. Table 1 Year New Machine First Overhaul Second Overhaul Third Overhaul Fourth Overhaul $2,300 $1,000 S1,100 $1,700 $2,300$3,200 $1,300 $1,100 1,300$1,700 2 Analyze the situation and indicate what decision should be made. Assume that machines have no salvage value at any time and that the cost of capital is 15 percent per year

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