Question
The replacement of a planning machine is being considered by the Reardorn Furniture Company.? (There is an indefinite future need for this type of? machine.)
The replacement of a planning machine is being considered by the Reardorn Furniture Company.? (There is an indefinite future need for this type of? machine.) The best challenger will cost ?$32,000 for installation and will have an estimated economic life of 14 years and a ?$1,800 MV at that time. It is estimated that annual expenses will average ?$16,500 per year. The defender has a present BV of ?$6,000 and a present MV of ?$4500 . Data for the defender for the next three years are given below. Using a? before-tax interest rate of 10 ?% per? year, make a comparison to determine whether it is economical to make the replacement now.
1. Fill in the table for the EUAC values for the defender for years? 1-3
2. What is the EUAC for the challenger over it's useful life?
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