A company is currently using a machine, which has 5 years of remaining life and the annual operating costs (AW) given in the table below. These costs are calculated based on initial cost, annual maintenance costs and salvage values. The engineer is asked if this current machine is to be replaced with a new machine which has an optimum life of n=3 years and the corresponding annual costs of 23,250 dolars/year for every year. What is the optimum life of the current machine and should it be replaced now? 3- Number of Years to be 1 13 4 Operated (n) Operating Costs/Year if used n years 30,265 28,420 25,360 26,210 27,670
A company is currently using a machine, which has 5 years of remaining life and the annual operating costs (AW) given in the table below. These costs are calculated based on initial cost, annual maintenance costs and salvage values. The engineer is asked if this current machine is to be replaced with a new machine which has an optimum life of n=3 years and the corresponding annual costs of 23,250 dolars/year for every year. What is the optimum life of the current machine and should it be replaced now? 3- Number of Years to be 1 13 4 Operated (n) Operating Costs/Year if used n years 30,265 28,420 25,360 26,210 27,670
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![3- A company is currently using a machine, which has 5 years of remaining life and the annual
operating costs (AW) given in the table below. These costs are calculated based on initial cost,
annual maintenance costs and salvage values. The engineer is asked if this current machine is
to be replaced with a new machine which has an optimum life of n=3 years and the
corresponding annual costs of 23,250 dolars/year for every year. What is the optimum life of
the current machine and should it be replaced now?
Number of Years to be
1.
2
13
4
15
Operated (n)
Operating Costs/Year
if used n years
30,265
28,420
25,360
26,210
27,670
a)
Optimum Life=4 Years, Do not Replace it now
b)
Optimum Life=D3 Years, Do not Replace it now
Optimum Life=1 Year, Replace it now
Optimum Life%3D3 Years, Replace it now
e)
Optimum Life=4 Years, Replace it now
Boş bırak](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9c6766b0-d936-4451-a991-4675b209fda2%2F6a4c7f53-1f45-463a-9a66-eb646c89927d%2F8ajrtk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3- A company is currently using a machine, which has 5 years of remaining life and the annual
operating costs (AW) given in the table below. These costs are calculated based on initial cost,
annual maintenance costs and salvage values. The engineer is asked if this current machine is
to be replaced with a new machine which has an optimum life of n=3 years and the
corresponding annual costs of 23,250 dolars/year for every year. What is the optimum life of
the current machine and should it be replaced now?
Number of Years to be
1.
2
13
4
15
Operated (n)
Operating Costs/Year
if used n years
30,265
28,420
25,360
26,210
27,670
a)
Optimum Life=4 Years, Do not Replace it now
b)
Optimum Life=D3 Years, Do not Replace it now
Optimum Life=1 Year, Replace it now
Optimum Life%3D3 Years, Replace it now
e)
Optimum Life=4 Years, Replace it now
Boş bırak
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