Question
A high-speed electronic assembly machine was purchased two years ago for $50,000. At present time, it can be sold for $25,000 and replaced by a
A high-speed electronic assembly machine was purchased two years ago for $50,000. At present time, it can be sold for $25,000 and replaced by a newer model having a purchase price of $42,500; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. The projected resale values and operating and maintenance costs for the challenger and the defender are shown in the accompanying table on a year-by-year basis. If the MARR is 15%, when should the old assembly machine be replaced?
1) A high-speed electronic assembly machine was purchased two years ago for $50,000. At present time, it can be sold for $25,000 and replaced by a newer model having a purchase price of $42,500; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. The projected resale values and operating and maintenance costs for the challenger and the defender are shown in the accompanying table on a year-by-year basis. If the MARR is 15%, when should the old assembly machine be replaced? Use the following data table for your analysis. Year Challenger Defender Market value (S) O&M costs (S) Market value (S)O&M costs($ 0 1 42,500 31,000 25,000 25,000 10,000 12,500 14,000
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