question_answer

Pawell Corporation, a large diversified manufacturer of aircraft components, is trying to determine the initial investment required to replace an old machine with a new, more sophisticated model. The present machine is working correctly but in order to upgrade it with new technology, they purchased a new machine for Rs.  Lakh and an additional Rs. will be required to install it. After the depreciation, the value of the machine becomes zero but the owner is not ready to analyse the situation. Finally the firm has found that a buyer is willing to pay Rs. lakh for the present machine and the firm refused it.

(i) Find out the decision taken by him and also suggest whether the decision is favourable or not?

(ii) State the factors affecting such decision.

Answer:

Not Available