Allen Construction purchased a crane 6 years ago for $130,000. They need a crane of this capacity for the next 5 years. Normal operation costs $35,000 per year. The current crane will have no salvage value at the end of 5 more years. Allen can trade in the current crane for its market value of $40,000 toward the purchase of a new one, which costs $150,000. The new crane will cost only $8,000 per year under normal operating conditions and will have a salvage value of $55,000 after 5 years. If MARR is 20%, determine which option is preferred.

Chapter 07, Problem 009 Allen Construction purchased a crane 6 years ago for $130,000. They need a crane of this capacity for the next 5 years. Normal operation costs $35,000 per year. The current crane will have no salvage value at the end of 5 more years. Allen can trade in the current crane for its market value of $40,000 toward the purchase of a new one, which costs $150,000. The new crane will cost only $8,000 per year under normal operating conditions and will have a salvage value of $55,000 after 5 years. If MARR is 20%, determine which option is preferred. Click here to access the TVM Factor Table Calculator Use the cash flow approach (insider's viewpoint approach) Show the EUAC values used to make your decision: Keep existing crane Keep existing crane: $ Replace with new crane:$ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 10 Preferred option? Use the opportunity cost approach (outsider's viewpoint approach) Show the EUAC values used to make your decision: Keep existing crane:$ Replace with new crane:$ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 10 Preferred option