A used old model testing machine was donated to a University by a company one year ago. It is expected that this machine will continue to serve its function for ten more years provided that a maintenance agreement is signed with another firm requiring 10 yearly payments of $9,000 each, with the first payment made now. A new model can be leased for ten years. The terms of lease include maintenance. For leasing the new model, a payment of $40,000 is due now and $40,000 will be due in 3 years. Should the old model machine be replaced now, at MARR = 10%?How to deal this problem with present worth method, incremental present worth method and incremental IRR method?
A used old model testing machine was donated to a University by a company one year ago.
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