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Building 47,200 Conveyor modification 14,500 Electrical (wiring) 16,500 Sub total $135,400 Engineering 7,000 Construction management 20,000 Contingency 16,200 Total $178,600 Useful life of new edger

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Building 47,200 Conveyor modification 14,500 Electrical (wiring) 16,500 Sub total $135,400 Engineering 7,000 Construction management 20,000 Contingency 16,200 Total $178,600 Useful life of new edger 10 years Salvage value Building (tear down) $0 Equipment 10% of the original cost Annual O&M costs $35,000 Depreciation Methods Building 39-year MACRS Equipment and 7-year MACRS installation Twenty-five percent of total mill volume passed through the edger. A 12% yield improvement i expected to be realized on this production, which will result in an improvement of total mill volume of (0.25)(0.12)=3%, or an annual savings of $57,895. (a) Should the defender be replaced now if the mill's MARR and marginal tax rate are 15% and 40%, respectively

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