To determine the amount of economic loss during the ownership of the machine, we need to compare the different options and consider the depreciation and salvage value.
Option 1: Selling the machine now for $2,300:
In this case, the economic loss would be the difference between the original cost and the selling price:
Economic loss = Original cost - Selling price
Economic loss = $5,000 - $2,300
Economic loss = $2,700
Option 2: Using the machine for three more years:
Since the book value of the machine is currently $1,300, we can consider this as the new salvage value after four years of ownership. If the machine is used for three more years with no salvage value at the end, the total depreciation over this period would be:
Depreciation over three years = Book value - Salvage value
Depreciation over three years = $1,300 - $0
Depreciation over three years = $1,300
Therefore, the amount of economic loss during the ownership of the machine, if it is used for three more years, would be $1,300.
Comparing the two options, it is more economically beneficial to sell the machine now, as the economic loss would be lower ($2,700) compared to using it for three more years ($1,300 in economic loss).