Susan Is Considering the Purchase of a New Machine for Her

Essay

Susan is considering the purchase of a new machine for her division at work. They had a busier year than expected, and that expedited wear and tear on the existing machine used by her division. She argued that purchasing a new machine instead of fixing the current machine would be the smarter investment for the company. Susan pulled together some information about the new machine (all figures listed are specifically tied to the new machine): Sales: $2,428 Operating Expenses: $1,870 Cost (new machine): $9,764 The company has a Required Rate of Return of 5%. What is the Residual Income that would be generated by the new machine?