題組內容

5. AB Company is considering replacement of its old machine with a new, more cost-saving one. Information related to the old and new machines follows:


The old machine had been purchased a year ago. AB estimates that either machine has a remaining useful life of 5 years. At the end of 5 years, either machine would have a salvage value of zero.
Ignore the effect of income taxes and the time value of money.
Required:

(3) At what purchase price would AB be indifferent between purchasing the new machine and continuing to use the old machine? (5%)