Replace the machine with an identical new machine

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A special purpose machine can be purchased for $90,000. The operating & maintenance expenses for each of the next five years and the market value at the end of each of the next five years are shown below. If the MARR is 15% per year compounded yearly, determine the best time to replace the machine with an identical new machine.

Year 1 2 3 4 5

Op. & Main. Exp. $20K $25K $30K $40K $60K

MV at the end of yr $65K $45K $30K $20 $10K

Reference no: EM131166438

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