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A present asset (defender) has a current market value of $85,000 (year 0 dollars). Estimated market values at the end of the next three years,
A present asset (defender) has a current market value of $85,000 (year 0 dollars). Estimated market values at the end of the next three years, expressed in year 0 dollars, are MV1= $75190, MV2 = $63654, MV3 = $43709. The annual expenses (expressed in year 0 dollars) are $15,000 and are expected to increase at 4.5% per year. The before-tax nominal MARR is 15% per year. The best challenger has an economic life of five years and its associated EUAC is $39,100. Based on this information and a before-tax analysis, what are the marginal costs of the defender each year and when should you plan to replace the defender with the challenger? Please calculate answers to the nearest whole dollar. Format: 0000 No commas. a. What is the EUAC of the challenger? b. Fill out the table below. Year MV CR Amount Annual Expenses PW Annual Expenses EUAC Annual Cumulative EUAC Expenses 85000 75190 63654 000 DID 000 000 43709 c. The defender should be kept years and sold after because: OA. EUAC of the Defender is greater than the Challenger O B. EUAC of the Defender is less than the Challenger A present asset (defender) has a current market value of $85,000 (year 0 dollars). Estimated market values at the end of the next three years, expressed in year 0 dollars, are MV1= $75190, MV2 = $63654, MV3 = $43709. The annual expenses (expressed in year 0 dollars) are $15,000 and are expected to increase at 4.5% per year. The before-tax nominal MARR is 15% per year. The best challenger has an economic life of five years and its associated EUAC is $39,100. Based on this information and a before-tax analysis, what are the marginal costs of the defender each year and when should you plan to replace the defender with the challenger? Please calculate answers to the nearest whole dollar. Format: 0000 No commas. a. What is the EUAC of the challenger? b. Fill out the table below. Year MV CR Amount Annual Expenses PW Annual Expenses EUAC Annual Cumulative EUAC Expenses 85000 75190 63654 000 DID 000 000 43709 c. The defender should be kept years and sold after because: OA. EUAC of the Defender is greater than the Challenger O B. EUAC of the Defender is less than the Challenger
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