Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. tesla management are trying to decide whether to k

Tesla management are trying to decide whether to keep an older piece of machinery or...

70.2K

Verified Solution

Question

Accounting

Tesla management are trying to decide whether to keep an older piece of machinery or buy a replacement. Management was presented with the following information to assist in their decision:
The old machine was purchased three years ago for $301,000 and has a current book value using straight-line depreciation of $189,000.
The old machine incurs operating expenses of $38,000 per year.
The current disposal value of the old machine is $78,000; if it is kept nine more years, its remaining value would be $11,000.
The replacement machine would cost $238,000 and have a useful life of nine years.
The replacement machine has an expected salvage value of $67,000 after nine years.
The replacement machine would require $11,000 per year in operating expenses.
Required
Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced?
\table[[,\table[[Keep Old],[Machine]],\table[[Purchase New],[Machine]]],[Total costs,,],[Should the old machine be replaced?,]]
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students