A machine purchased a year ago for $85,000 costs more to operate than anticipated. At the time of the purchase, it was expected to be used for 10 years with annual maintenance costs of $22,000 and a salvage value of $10,000. However, last year, it incurred a cost $39,000, which is expected to escalate to $40,400 this year and increase by $1,400 each year thereafter. The market value is now estimated to be $82,000-$11,000k, where k is the number of years since the machine was purchased. It is now estimated that the machine will be useful for a maximum of 6 more years. A replacement study is to be performed. Determine the values of P, n, AOC for year 6 and Sof this defender. The value of Pis $ The value ofn is years. The AOC for year 6 is The value of Sis $
A machine purchased a year ago for $85,000 costs more to operate than anticipated. At the time of the purchase, it was expected to be used for 10 years with annual maintenance costs of $22,000 and a salvage value of $10,000. However, last year, it incurred a cost $39,000, which is expected to escalate to $40,400 this year and increase by $1,400 each year thereafter. The market value is now estimated to be $82,000-$11,000k, where k is the number of years since the machine was purchased. It is now estimated that the machine will be useful for a maximum of 6 more years. A replacement study is to be performed. Determine the values of P, n, AOC for year 6 and Sof this defender. The value of Pis $ The value ofn is years. The AOC for year 6 is The value of Sis $
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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P is
S is salvage value
Transcribed Image Text:A machine purchased a year ago for $85,000 costs more to operate than anticipated. At the time of the purchase, it was expected to
be used for 10 years with annual maintenance costs of $22.000 and a salvage value of $10,000. However, last year, it incurred a cost
$39,000, which is expected to escalate to $40,400 this year and increase by $1,400 each year thereafter. The market value is now
estimated to be $82,000-$11,000k, where k is the number of years since the machine was purchased. It is now estimated that the
machine will be useful for a maximum of 6 more years. A replacement study is to be performed. Determine the values of P, n, AOC for
year 6 and Sof this defender.
The value of Pis $
The value ofn is
years
The AOC for year 6 is
The value of Sis $
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