Question
Use hand calculations An asset purchased 7 years ago for 60,000 SR, can be sold now for 30,000 SR or kept for a maximum of
Use hand calculations
An asset purchased 7 years ago for 60,000 SR, can be sold now for 30,000 SR or kept for a maximum of 4 more years, in which case its operating cost will be 2,000 SR each year, with a salvage value of 15,000 SR after one year, 10,000 SR after two years or 5,000 SR after three years or 3,000 SR after four years. A suitable challenger will have an annual worth of 20,000 SR per year and can be used for a maximum of 4 years. At an interest rate of 15% per year and over a study period of exactly 6 years, determine when the defender should be replaced using the present worth analysis.
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