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6) (35 points) Emkay Electronics Corporation is considering the following two alternatives to meet an anticipated increase in demand for its electronic goods. The existing
6) (35 points) Emkay Electronics Corporation is considering the following two alternatives to meet an anticipated increase in demand for its electronic goods. The existing machine has a remaining life of 5 years and it will have a salvage value of $10,000 at the end of its useful life. O&M costs have been $35.000/y. Currently the machine has a market value of $50,000. Alternative 1 Purchase a new automatic machine with the following characteristics and sell the existing machine at its market value Initial cost: $160,000 Estimated life: 5 years End-of-life salvage: $25,000 Annual O&M costs: S40,000 Alternative 2 Keep the existing machine and buy another small machine in order to meet the increase in demand. This smaller machine will cost $75,000, has a salvage value of $10,000 in 5 years, and has O&M costs of $15,000/yr. Using an EUAC comparison with a MARR of 10% per year compounded annually, which alternative would you recommend? At 20.000
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