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0 One of the four ovens at a bakery is being considered for replacement. Its salvage value and maintenance costs are given in the table
0 One of the four ovens at a bakery is being considered for replacement. Its salvage value and maintenance costs are given in the table below for several years. A new oven costs $80,000 and this price includes a complete guarantee of the maintenance costs for the first two years, and it covers a good proportion of the maintenance costs for years 3 and 4. The salvage value and maintenance costs are also summarized in the table. Both the old and new ovens have similar productivities and energy costs. If the MARR equals 10%, which one of the following statements is true? old Oven Year Salvage value at the end of the Operating and Maintenance year cost $20000 1 $17000 $6487 2 $14000 $6587 3 $11000 $6687 $7000 $6787 New Oven Year Salvage value at the end of the Operating and Maintenance year cost 0 $80000 1 $75000 0 2 $74000 3 $66000 $1000 4 $62000 $3000 O Replace now; economic service life of the challenger is 2 years. Do not replace at all; economic service life of the challenger is 2 years. Replace at the end of year 4; economic service life of challenger is 4 years. O Replace oven year 3; economic service life of challenger is 3 years. 4 0
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