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X Company must decide whether to continue using its current equipment or replace it with...

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Accounting

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X Company must decide whether to continue using its current equipment or replace it with new, more efficient equipment. The following information is available for the current and new equipment Current equipment Current sales value Final sales value Operating costs $10,000 4,000 68,000 New equipment Purchase cost Final sales value Operating cost savings $45,000 6,000 9,000 Maintenance work will be necessary on the current equipment in Year 4, costing $3,000. The current equipment will last for 6 more years; the life of the new equipment is also 6 years. Assuming a discount rate of 5%, what is the net present value of replacing the current equipment

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