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A machine purchased 3 years ago for $140,000 is now too slow to satisfy the...

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Accounting

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A machine purchased 3 years ago for $140,000 is now too slow to satisfy the demand of the customers. It can be upgraded now for $74,000 or sold to a smaller company internationally for $35,000. The upgraded machine will have an annual operating cost of $90,000 per year and a $40,000 salvage value in 3 years. If upgraded, the presently owned machine will be retained for only 3 more years, then replaced with a machine to be used in the manufacture of several other product lines. The replacement machine, which will serve the company now and for a maximum of 8 years, costs $205,000. Its salvage value will be $58,000 for years 1 through 5 $20,000 after 6 years, and $10,000 thereafter. It will have an estimated operating cost of $45,000 per year. Perform an economic analysis at 8% per year using a specified 3-year planning horizon. a) Determine if the current machine should be replaced now or 3 years from now b) Once decided, determine the equivalent AW for the next three years a) The current machine should be replaced [(Click to select) b) The equivalent AW for the next three years is $

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