2. An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been developed for both the defender and the challenger. Defender Challenger Current MV Required upgrade Annual expenses Remaining useful life MV at end of useful life $38,000 $2,000 $1,400 6 years -$1,500 Purchase price Installation cost Annual expenses Useful life $51,000 $5,500 $1,000 10 years $7,000 MV at end of useful life The company's before-tax MARR is 20% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for an indefinite period of time.

Structural Analysis
6th Edition
ISBN:9781337630931
Author:KASSIMALI, Aslam.
Publisher:KASSIMALI, Aslam.
Chapter2: Loads On Structures
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Comparison of Alternative
2. An existing robot can be kept if $2,000 is spent now to upgrade it for future service
requirements. Alternatively, the company can purchase a new robot to replace the old robot.
The following estimates have been developed for both the defender and the challenger.
Defender
Challenger
Current MV
Required upgrade
Annual expenses
Remaining useful life
MV at end of useful life
$38,000
$2,000
$1,400
6 years
-$1,500
Purchase price
Installation cost
Annual expenses
Useful life
MV at end of useful life
$51,000
$5,500
$1,000
10 years
$7,000
The company's before-tax MARR is 20% per year. Based on this information, should the existing
robot be replaced right now? Assume the robot will be needed for an indefinite period of time.
Transcribed Image Text:2. An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been developed for both the defender and the challenger. Defender Challenger Current MV Required upgrade Annual expenses Remaining useful life MV at end of useful life $38,000 $2,000 $1,400 6 years -$1,500 Purchase price Installation cost Annual expenses Useful life MV at end of useful life $51,000 $5,500 $1,000 10 years $7,000 The company's before-tax MARR is 20% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for an indefinite period of time.
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