The manager of Big Mac Ltd is considering the purchase of equipment to make hamburgers that will reduce annual operating costs by $1500. The equipment will cost $6000 and will have a useful life of five years with no resale value. The new equipment will replace equipment purchased five years ago at a cost of $10 000, that has a book value of $5000 and no resale value. What will be the net effect on profit for the next five years in total if the new equipment is purchased? (Ignore tax effects.)

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The Answer of The manager of Big Mac Ltd is considering the purchase of equipment to make hamburgers that will reduce annual operating costs by $1500. The equipment will cost $6000 and will have a useful life of five years with no resale value. The new equipment will replace equipment purchased five years ago at a cost of $10 000, that has a book value of $5000 and no resale value. What will be the net effect on profit for the next five years in total if the new equipment is purchased? (Ignore tax effects.)

The Manager of Big Mac Ltd Is Considering the Purchase