Question
GENERAL INSTRUCTIONS: ENTER YOUR ANSWER WITHOUT THE $ SIGN AND COMMA, BUT FORMATTED IN DOLLARS ROUNDED TO THE NEAREST DOLLAR, for instance if you compute
GENERAL INSTRUCTIONS: ENTER YOUR ANSWER WITHOUT THE $ SIGN AND COMMA, BUT FORMATTED IN DOLLARS ROUNDED TO THE NEAREST DOLLAR, for instance if you compute $77,342.6478 then ENTER 77343 AS YOUR ANSWER. DO NOT ROUND IN YOUR CALCULATION STEPS (use calculator memory functions) TO AVOID ROUNDING ERRORS. There is a little bit of tolerance built into accepting/rejecting your answer, but if you round in your intermediate calculations you may be too far off.
Waldorf Manufacturing is operating a production facility, which will be closed in 3 years. A decision needs to be made whether to keep the existing machine in operation for 3 more years, despite its significant wear and tear, or whether to acquire a new machine instead, only to be used for 3 years before sold. The existing machine could be sold for $40,000 today, or if kept for 3 more years, could be sold for $9,000 in 3 years. Its annual operating and maintenance costs are $11,000. Replacing the existing machine with a new one would have no impact on revenues. Calculate the annual worth (AW) of keeping the defender for 3 more years. Use 5% interest rate for discounting. (Note: your answer should be viewed as the AW of the machine's costs, so entered as a positive number.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started