Question
A company is trying to decide whether it should upgrade a machine it has or purchase a newer version of the machine. It will
A company is trying to decide whether it should upgrade a machine it has or purchase a newer version of the machine. It will need to use the machine for the next 6 years. If it upgrades the machine it already owns, this would cost $41,000; the machine it owns would cost $9,800 per year to operate and maintain. At the end of 6 years, the machine would have a salvage value of $2,400. Alternatively, it could trade in the machine it owns for $23,000 and purchase a new machine for $89,000. The new machine would cost $2,400 per year to operate and maintain. At the end of 6 years, the machine would have a salvage value of $16,000. Assuming the company has a MARR of 8%, compute the EUAC of both the upgraded and new machine using the insider perspective. Click here to access the TVM Factor Table Calculator. EUAC(rebuild): $ $ EUAC(new): Carry all interim calculations to 5 decimal places and then round your final answers to a whole number. The tolerance is 5. Which alternative would you recommend?
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