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Sy, a plastics processor, is considering the purchase of a high-speed extruder as one option. The new extruder would cost $54,000 and would have
Sy, a plastics processor, is considering the purchase of a high-speed extruder as one option. The new extruder would cost $54,000 and would have a residual value of $8,000 at the end of its 10-year life. The annual operating axpenses of the me extruder would be $8,000. The other option that Sly has is to rebuild existing extruder. The rebuilding would require an investment of $60,000 and would extend the life of the existing extruder by 10 years. The existing extruder has annua cperating costs of $15,000 per year and does not have a residus value. Sly's discount rate is 14%. Using net present value analysis, which option is the better option and by how much? Present Value of $1 Periods 12% 14% 16% 0.507 0.450 0410 B 0.404 0351 0.305 10 0322 0270 0.227 0262 0208 0.560 Prisant Vue of Aenuity of $1 Paroda 12% 14% 10% 38M 3405 4.968 4.630 4344 10 5 5216 4833 12 6.154 5.000 5.107 OA Betely $12,512 so wut existing w CB. Beer by $32,513 to purchase new ter OCBter by $34,672 in purchase new extruder OD Berty SM672 to bus dating ed
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