Short Term Deeision Making On Your Own $2 Ryan, a farmer, has another decision to...
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Short Term Deeision Making On Your Own $2 Ryan, a farmer, has another decision to make about his machinery. He has a machine with a book value of $80,000 and a remaining 4-year life. He is considering another, more efficient, machine that costs $75,000. The new machine also has a 4-year life. Ryan can sell his old machine for $60,000, and the new machine will reduce his farming costs by $4,000 per year over the 4 years. Ignore time value of money for this problem. a) Ignoring time value of money, should Ryan keep or replace his machine? b) Do you get the same answer if you consider the time value of money? (use an interest rate of 5% )
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