Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please show all the steps. Chatham Automotive purchased new electric forklifts to move steel automobile parts two years ago. They cost $75,000 each, including the

image text in transcribed

please show all the steps.

Chatham Automotive purchased new electric forklifts to move steel automobile parts two years ago. They cost $75,000 each, including the charging stand. In practice, it was found that they did not hold I charge as long as claimed by the manufacturer, so operating costs are very high. As a result, their current salvage value is about $10,000. Chatham is considering replacing them with propane models. New propane forklifts cost $58,000 each. After one year, they have a salvage value of $40,000, and thereafter decline in value at a declining-balance depreciation rate of 20 percent, as does the electric model from this time on. The MARR is 8 percent. Operating costs for the electric model will be $20,000 this year, rising by 12 percent per year. Operating costs for the propane model will initially be $10,000 over the first year, rising by 12 percent per year. Should Chatham Automotive replace the forklifts now? Click the icon to view the table of compound interest factors for discrete compounding periods when i = 8%. Chatham Automotive purchased new electric forklifts to move steel automobile parts two years ago. They cost $75,000 each, including the charging stand. In practice, it was found that they did not hold I charge as long as claimed by the manufacturer, so operating costs are very high. As a result, their current salvage value is about $10,000. Chatham is considering replacing them with propane models. New propane forklifts cost $58,000 each. After one year, they have a salvage value of $40,000, and thereafter decline in value at a declining-balance depreciation rate of 20 percent, as does the electric model from this time on. The MARR is 8 percent. Operating costs for the electric model will be $20,000 this year, rising by 12 percent per year. Operating costs for the propane model will initially be $10,000 over the first year, rising by 12 percent per year. Should Chatham Automotive replace the forklifts now? Click the icon to view the table of compound interest factors for discrete compounding periods when i = 8%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Oxford Handbook Of Entrepreneurial Finance

Authors: Douglas Cumming

1st Edition

0195391241, 978-0195391244

More Books

Students also viewed these Finance questions