3. Big-J Construction Company, Inc. (Big-J CC) is conducting a routine periodic review of existing field equipment. They use a MAAR of 20%. This includes a replacement evaluation of a paving machine now in use. The machine was purchased 5 years ago for $200,000, The paver's current market value is $65,000, and yearly operating and maintenance costs are as follows. Maintenance Cost in Year n 12,000 18,000 20,000 25,000 30,000 Year, n 1 235 Operating Cost in Year n 17,000 20,000 25,000 30,000 35,000 Market Value If Sold In Year n 50,000 40,000 35,000 30,000 25,000
3. Big-J Construction Company, Inc. (Big-J CC) is conducting a routine periodic review of existing field equipment. They use a MAAR of 20%. This includes a replacement evaluation of a paving machine now in use. The machine was purchased 5 years ago for $200,000, The paver's current market value is $65,000, and yearly operating and maintenance costs are as follows. Maintenance Cost in Year n 12,000 18,000 20,000 25,000 30,000 Year, n 1 235 Operating Cost in Year n 17,000 20,000 25,000 30,000 35,000 Market Value If Sold In Year n 50,000 40,000 35,000 30,000 25,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:3. Big-J Construction Company, Inc. (Big-J CC) is conducting a routine periodic
review of existing field equipment. They use a MAAR of 20%. This includes a
replacement evaluation of a paving machine now in use. The machine was
purchased 5 years ago for $200,000, The paver's current market value is $65,000,
and yearly operating and maintenance costs are as follows.
Maintenance
Cost in
Year n
12,000
18,000
20,000
25,000
30,000
Year,
n
1
235
Operating
Cost in
Year n
17,000
20,000
25,000
30,000
35,000
Market Value
If Sold
In Year n
50,000
40,000
35,000
30,000
25,000
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