Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

This is the entire question with all the given information shown. 6.1 The Crocobeach Hotel is considering replacing an industrial oven system of their kitchen.

image text in transcribedimage text in transcribed

This is the entire question with all the given information shown.

6.1 The Crocobeach Hotel is considering replacing an industrial oven system of their kitchen. The purchase cost of a new one will be $122,000 and will have lower maintenance costs per year compared with the older one. The current machine can be sold for $52,000 now. The salvage value and maintenance costs per year are listed below for both alternatives. Assume a 3-year useful life and the MARR is 8%. EOY 0 1 2 3 Old Machine New Machine Salvage Value Maintenance Costs Salvage Value Maintenance Costs 52,000 $ $ 122,000 $ $ 46,000 $ 7,000 $ 110,000 $ 2.800 $ 39,600 $ 10,200 $ 105,000 $ 3,900 34,000 $ 12,400 $ 98,000 4,500 a) Calculate the Marginal Cost of the Old machine (Defender). Which replacement analysis technique will you use and why? (10 points] EOY S Value at EOY Loss in Market Interest Interest in Year Value Rate N Maint. Cost Total Marginal Cost 0 1 N 3 b) Find the EUACs of the Capital Recovery for new machine (Challenger). [10 points] EOY S Value at EOY P-S (A/P,8%,N) Si CR EUAC 0 1 2 2 3 c) Find the EUACs of Maintenance Cost for new machine (Challenger). [10 points) d) Find the Total EUACs of the two altematives (8 points) e) When (Economic Life) should the old machine be replaced? Why? (2 point] 6.1 The Crocobeach Hotel is considering replacing an industrial oven system of their kitchen. The purchase cost of a new one will be $122,000 and will have lower maintenance costs per year compared with the older one. The current machine can be sold for $52,000 now. The salvage value and maintenance costs per year are listed below for both alternatives. Assume a 3-year useful life and the MARR is 8%. EOY 0 1 2 3 Old Machine New Machine Salvage Value Maintenance Costs Salvage Value Maintenance Costs 52,000 $ $ 122,000 $ $ 46,000 $ 7,000 $ 110,000 $ 2.800 $ 39,600 $ 10,200 $ 105,000 $ 3,900 34,000 $ 12,400 $ 98,000 4,500 a) Calculate the Marginal Cost of the Old machine (Defender). Which replacement analysis technique will you use and why? (10 points] EOY S Value at EOY Loss in Market Interest Interest in Year Value Rate N Maint. Cost Total Marginal Cost 0 1 N 3 b) Find the EUACs of the Capital Recovery for new machine (Challenger). [10 points] EOY S Value at EOY P-S (A/P,8%,N) Si CR EUAC 0 1 2 2 3 c) Find the EUACs of Maintenance Cost for new machine (Challenger). [10 points) d) Find the Total EUACs of the two altematives (8 points) e) When (Economic Life) should the old machine be replaced? Why? (2 point]

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_2

Step: 3

blur-text-image_3

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

Principles Of Food Beverage And Labor Cost Controls

Authors: Paul R. Dittmer, Gerald G. Griffin

6th Edition

0471293253, 978-0471293255

More Books

Students also viewed these Accounting questions

Question

Why should goals be specific and measurable?

Answered: 1 week ago

Question

How does nonverbal communication express cultural values?

Answered: 1 week ago