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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.
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
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