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Question3) An existing excavator of a construction company can be used for 6 more years with a yearly maintenance cost of 750.000 TL. Another option
Question3) An existing excavator of a construction company can be used for 6 more years with a yearly maintenance cost of 750.000 TL. Another option is to buy a new excavator, which can do the same work. The purchase price of the new excavator is 5.750.000 TL, and it can be used for 10 years. The yearly maintenance cost of the new excavator is 450.000 TL. Both excavators will have the salvage value of 600.000 TL at the end of their useful lives. What should be the minimum market price of the existing excavator today so that the replacement decision can be taken? Use the comparative use value method with the annual equivalence approach. The interest rate is given as 14% per year. Question3) An existing excavator of a construction company can be used for 6 more years with a yearly maintenance cost of 750.000 TL. Another option is to buy a new excavator, which can do the same work. The purchase price of the new excavator is 5.750.000 TL, and it can be used for 10 years. The yearly maintenance cost of the new excavator is 450.000 TL. Both excavators will have the salvage value of 600.000 TL at the end of their useful lives. What should be the minimum market price of the existing excavator today so that the replacement decision can be taken? Use the comparative use value method with the annual equivalence approach. The interest rate is given as 14% per year
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