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Junior Bakeries is considering to replace its baking system and either buying or leasing a new system. Operating and maintaining the old system costs $
Junior Bakeries is considering to replace its baking system and either buying or leasing a new system. Operating and maintaining the old system costs $ annually, it has a
remaining life of years, and an estimated salvage value of $ at that time.
Junior Bakeries can buy a new system for $; it will be worth $ in years; and it will have annual operating and maintenance costs of $ If they decide to buy the
new system, they will tradedin the old system for $
Leasing a new system will cost $ per year, and they will need to make this payment at the beginning of the year, plus operating costs of $ year, which are to be paid at
the end of the year. If the new system is leased, they will sell the old system for $
With an MARR of and an year planning horizon, determine the minimal EUAC given the options of: keeping the existing system; purchasing a new system; or leasing a
new system?
Note: Use the cash flow approach.
buying new: $
keeping current system: $
buying new: $
leasing new system: $
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