A CNC machine has an initial cost of $38,000

Economics Apr 12, 2022

A CNC machine has an initial cost of $38,000. It is expected that its market value will be lower by $3000 every year. The net annual revenue is estimated as $6000 in the first year, but it is also expected to increase by $750 every year. The equipment will have a maximum useful life of 5 years. The company's MARR is 8% per year. When is the best time to abandon the equipment? Explain your answer showing all of your calculations.