Cherry, Inc., currently has a machine that costs $50,000 per year to operate. The machine...
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Cherry, Inc., currently has a machine that costs $50,000 per year to operate. The machine can produce 60,000 units per year. Two years ago, the company borrowed $450,000 to purchase the machine; it still owes $325,000 of that amount. Cherry could sell the machine for $295,000 and purchase a new, more efficient machine at a cost of $480,000. The new machine can produce 85,000 units per year; its annual operating costs would be $55,000. Indicate whether each piece of information in this scenario is relevant or irrelevant to the decision to purchase the new machine.
Operating cost of old machine
select an option Relevant Irrelevant
Production of old machine
select an option Relevant Irrelevant
Purchase price of old machine
select an option Relevant Irrelevant
Loan balance
select an option Relevant Irrelevant
Market value of old machine
select an option Relevant Irrelevant
Cost of new machine
select an option Relevant Irrelevant
Production of new machine
select an option Relevant Irrelevant
Operating cost of new machine
select an option Relevant Irrelevant
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