A company that makes micro motion compact coriolis meters purchased a new packaging system for $600,000. The estimated salvage value was $28,000 after 10 years. Currently the expected remaining life is 7 years with an AOC of $27,000 per year and an estimated salvage value of $40,000. The company is considering early replacement of the system with one that costs $370,000, has a 12-year economic service life, a $22,000 salvage value, and an estimated AOC of $50,000 per year. The MARR for the corporation is 12% per year. (a) Determine the minimum trade-in value necessary now to make the replacement economically advantageous. (b) Write the spreadsheet functions necessary to determine RV using Goal Seek.
A company that makes micro motion compact coriolis
meters purchased a new packaging system
for $600,000. The estimated salvage value was
$28,000 after 10 years. Currently the expected remaining
life is 7 years with an AOC of $27,000 per year and an estimated salvage value of
$40,000. The company is considering early replacement
of the system with one that costs
$370,000, has a 12-year economic service life, a
$22,000 salvage value, and an estimated AOC of
$50,000 per year. The MARR for the corporation
is 12% per year. (a) Determine the minimum
trade-in value necessary now to make the replacement
economically advantageous. (b) Write the
spreadsheet functions necessary to determine RV
using Goal Seek.
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