A company is considering replacing a machine that was bought six years ago for $50,000. The machine,
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A company is considering replacing a machine that was bought six years ago for $50,000. The machine, however, can be repaired and its life extended by five more years. If the current machine is replaced, the new machine will cost $44,000 and will reduce the operating expenses by $6,000 per year. The seller of the new machine has offered a trade-in allowance of $15,000 for the old machine. If MARR is 12% per year before taxes, how much can the company spend to repair the existing machine? Choose the closest answer.
(a) $22,371
(b) $50,628
(c) $7,371
(d)−$1,000
MARRMinimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...
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Related Book For 
Engineering Economy
ISBN: 978-0133439274
16th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
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