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What is the incremental net present value

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Question - X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $62,000 per year; operating costs with the new machine are expected to be $40,000 per year. The new machine will cost $45,000 and will last for five years, at which time it can be sold for $2,000. The current machine will also last for five more years but will not be worth anything at that time. It cost $33,000 three years ago but is currently worth only $5,000.

Assuming a discount rate of 8%, what is the incremental net present value of buying the new machine instead of keeping the current machine?

A: $20,916

B: $27,818

C: $36,998

D: $49,208

E: $65,447

F: $87,044

Reference no: EM133059234

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