Reference no: EM132529555

Question 1: Image Company is evaluating the possibility of replacing an old machine with a new one. The old one cost $200,000, can be sold now for $80,000, can be sold in 5 years for $0, costs $40,000 a year to operate, and has a remaining life of 5 years. The new one would cost $400,000, could be sold in 5 years for $20,000, costs $10,000 a year to operate and has a remaining life of 5 years. Ignore taxes. As far as operating costs go, if the company buys the new machine and disposes of the old machine, corporate profit over the five-year life will be _____ than the profit that would have been generated had the existing machine been retained for five years.