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Three years ago, a stamping machine was purchased for $250,000. Loss in productivity and increasing maintenance costs have moved the company to perform a replacement
Three years ago, a stamping machine was purchased for $250,000. Loss in productivity and increasing maintenance costs have moved the company to perform a replacement study. Currently, the market value of the equipment is $150,000; its market value will decrease by 20% for every extra year that is kept in use. Its operating cost is estimated at $25,000 the first year and increasing by $5,000 every year. Alternatively, the company can purchase a new system that will have an equivalent annual worth of $63,450 per year over its ESL. The company uses a MARR of 8% per year. Determine when the company should replace the stamping machine. Three years ago, a stamping machine was purchased for $250,000. Loss in productivity and increasing maintenance costs have moved the company to perform a replacement study. Currently, the market value of the equipment is $150,000; its market value will decrease by 20% for every extra year that is kept in use. Its operating cost is estimated at $25,000 the first year and increasing by $5,000 every year. Alternatively, the company can purchase a new system that will have an equivalent annual worth of $63,450 per year over its ESL. The company uses a MARR of 8% per year. Determine when the company should replace the stamping machine
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