Needed to perform replacement analysis

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Reference no: EM131609858

A piece of equipment for a candy factory is purchased for $20,000. The market value of the machine each year is 80% of the market value in the previous year. It is also expected that the operations and maintenance cost of the machine will be $2,000 annually. Using MACRS depreciation, an interest rate of 5% and a tax rate of 25%, determine the marginal costs of the machine in the first 2 years of use. Without performing further calculations what technique would be needed to perform a replacement analysis?

Reference no: EM131609858

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