Determine the uniform annual cost of machine


Response to the following problem:

Machine A was purchased three years ago for $10,000 and had an estimated market value of $1,900 at the end of its 10-year life. Annual operating costs are $1,450. The machine will perform satisfactorily for the next seven years. A salesman for another company is offering Machine B for $59,000 with an market value of $5,900 after 10 years. Annual operating costs will be $1,050. Machine A could be sold now for $16,000, and MARR is 50% per year.

Using the outsider viewpoint, what is the difference in the equivalent uniform annual cost (EUAC) of buying Machine B compared to continuing to use Machine A; i.e., EUAC(Machine B) - EUAC(Machine A). (Do not enter the dollar sign $ with your answer.)

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Cost Accounting: Determine the uniform annual cost of machine
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