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Chatham Automotive purchased new electric forklifts to move steel automobile parts two years ago. They cost $ 8 5 0 0 0 each , including
Chatham Automotive purchased new electric forklifts to move steel automobile parts two years ago. They cost $each including the charging stand. In practice, it was found that they did not hold a charge as long as claimed by the manufacturer, so operating costs are very high. As a result, their current salvage value is about $
Chatham is considering replacing them with propane models. New propane forklifts cost $ each. After one year, they have a salvage value of $ and thereafter decline in value at a decliningbalance depreciation rate of percent as does the electric model from this time on The MARR is percent. Operating costs for the electric model will be $ this year, rising by percent per year. Operating costs for the propane model will initially be $ over the first year, rising by percent per year. Should Chatham Automotive replace the forklifts now?
FILL IN THE BLANKS: Chatham automotive "should" or "should not" replace the forklifts now since the minimum total EAC for the electric forklifts is $ which is "higher" or "lower" than $"the minimum total EAC for the propane forklifts.
USE table of compound interest factors for discrete compounding periods when i
Round to the nearest dollar as needed.
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