Question
Machine A was purchased three years ago for $10,000 and had an estimated market value of $1,800 at the end of its 10-year life. Annual
Machine A was purchased three years ago for $10,000 and had an estimated market value of $1,800 at the end of its 10-year life. Annual operating costs are $1,500. The machine will perform satisfactorily for the next seven years. A salesman for another company is offering machine B for $50,000 with a market value of $5,000 after 10 years. Annual operating costs will be $600. Machine A could be sold now for $6,500, and the MARR is 15% per year. Using the outsider viewpoint, what is the equivalent uniform annual cost (EUAC) of continuing to use Machine A?
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