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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

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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 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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