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1. A piece of construction equipment was bought 3 years ago for $ 500,000, expected life of 8 years and a salvage value of $20,000.
1. A piece of construction equipment was bought 3 years ago for $ 500,000, expected life of 8 years and a salvage value of $20,000. The annual operating cost for this equipment is $58,000. It now can be sold for $200,000. An alternative piece of equipment can now be bought for $600,000, a salvage value of $150,000 and an expected life of 10 years. The annual operating cost for this equipment is $15,000. At MARR= 10% should we replace the old equipment? Use both EAC and P.W. Replace Not replace
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