Feed the Hungry Foundation
Feed the Hungry Foundation is a non-profit organization that has a cost of capital of 10 percent.The foundation is considering the replacement of a piece of equipment.The old machine has a book value of $3,000 and a remaining estimated life of 5 years with no salvage value at that time.The salvage value of the old machine is currently $1,500.The new equipment will cost $10,000.It has an estimated life of 5 years with no salvage value then.Annual cash operating costs are $4,000 for the old machine and $2,000 for the new machine.
Refer to Feed the Hungry Foundation.Would you advise the organization to replace the machine?

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The Answer of Feed the Hungry Foundation
Feed the Hungry Foundation is a non-profit organization that has a cost of capital of 10 percent.The foundation is considering the replacement of a piece of equipment.The old machine has a book value of $3,000 and a remaining estimated life of 5 years with no salvage value at that time.The salvage value of the old machine is currently $1,500.The new equipment will cost $10,000.It has an estimated life of 5 years with no salvage value then.Annual cash operating costs are $4,000 for the old machine and $2,000 for the new machine.
Refer to Feed the Hungry Foundation.Would you advise the organization to replace the machine?