A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $26,000 and replaced by a newer model having a purchase price of $38,500; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. If the before-tax MARR is 18%, when should the old assembly machine be replaced? Use the following data table for your analysis. Challenger Defender Year Market Value O&M Costs Market Value O&M Costs $38,500 30,000 26.000 $26,000 16,500 $13,500 $8,500 12,500 1 2 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 18% per year.
A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $26,000 and replaced by a newer model having a purchase price of $38,500; or it can be kept in service for a maximum of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. If the before-tax MARR is 18%, when should the old assembly machine be replaced? Use the following data table for your analysis. Challenger Defender Year Market Value O&M Costs Market Value O&M Costs $38,500 30,000 26.000 $26,000 16,500 $13,500 $8,500 12,500 1 2 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 18% per year.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:A high-speed electronic assembly machine was purchased two years ago for $50,000. At the present time, it can be sold for $26,000 and replaced by a newer model having a purchase price of $38,500; or it can be kept in service for a maximum
of one more year. The new assembly machine, if purchased, has a useful life of not more than two years. If the before-tax MARR is 18%, when should the old assembly machine be replaced? Use the following data table for your analysis.
Challenger
Defender
Year
Market Value
O&M Costs
Market Value
O&M Costs
$38,500
$26,000
1
30,000
$8,500
16,500
$13,500
2
26,000
12,500
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 18% per year.
Transcribed Image Text:The minimum EUAC value of the challenger is $
(Round to the nearest dollar.)
The marginal cost of keeping the defender in service for one more year is $
. (Round to the nearest dollar.)
The old assembly machine should be replaced
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