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Searching for ways to cut costs and increase profit, one of the industrial engineers at Home Comfort Furniture Manufacturers, Inc. determined that the equivalent annual
Searching for ways to cut costs and increase profit, one of the industrial engineers at Home Comfort Furniture Manufacturers, Inc. determined that the equivalent annual worth of an existing machine over its remaining useful life of 2 years is $-71,000 per year. The IE also determined that used machines like the one currently in use are not available any longer, but the defender can be replaced with a challenger that is more advanced. It will have an AW of $-78,050 if it is kept for 2 years or less, $-73,075 if it is kept between 3 and 4 years, and $-65,000 if it is kept for 5 to 10 years. If the company uses a specified 3-year planning horizon and an interest rate of 12% per year. a) Determine when the company should replace the machine b) Determine the AW for the next 3 years. a) The company should (Click to select) (Click to select) b) The AW for the next 3 keep the machine for 2 years and then replace with the challenger Replace now with challenger for all 3 years Searching for ways to cut costs and increase profit, one of the industrial engineers at Home Comfort Furniture Manufacturers, Inc. determined that the equivalent annual worth of an existing machine over its remaining useful life of 2 years is $-71,000 per year. The IE also determined that used machines like the one currently in use are not available any longer, but the defender can be replaced with a challenger that is more advanced. It will have an AW of $-78,050 if it is kept for 2 years or less, $-73,075 if it is kept between 3 and 4 years, and $-65,000 if it is kept for 5 to 10 years. If the company uses a specified 3-year planning horizon and an interest rate of 12% per year. a) Determine when the company should replace the machine b) Determine the AW for the next 3 years. a) The company should (Click to select) (Click to select) b) The AW for the next 3 keep the machine for 2 years and then replace with the challenger Replace now with challenger for all 3 years
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