A machine that cost $120,000 3 years ago can be sold now for $52,750. Its market value is expected to be $40,000 and $20,000 1 year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to be $23,000 for the next 2 years. A new improved machine that can be purchased for $136,750 will have an economic life of 5 years, and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year, determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now. The annual worth of the existing machine one year from now is $- now is $- ], and the annual worth of the new machine is $- The presently owned machine should be replaced (Click to select) the annual worth of the existing machine two years from
A machine that cost $120,000 3 years ago can be sold now for $52,750. Its market value is expected to be $40,000 and $20,000 1 year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to be $23,000 for the next 2 years. A new improved machine that can be purchased for $136,750 will have an economic life of 5 years, and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year, determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now. The annual worth of the existing machine one year from now is $- now is $- ], and the annual worth of the new machine is $- The presently owned machine should be replaced (Click to select) the annual worth of the existing machine two years from
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter14: Pricing Techniques And Analysis
Section: Chapter Questions
Problem 1.1CE: What life cycle cost concept begins raising concerns by year 5 with any electric vehicle (EV)? If...
Question
![A machine that cost $120,000 3 years ago can be sold now for $52,750. Its market value is expected to be $40,000 and $20,000 1
year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to
be $23,000 for the next 2 years. A new improved machine that can be purchased for $136,750 will have an economic life of 5 years,
and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year,
determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now.
The annual worth of the existing machine one year from now is $-
now is $-
], and the annual worth of the new machine is $-
The presently owned machine should be replaced (Click to select)
the annual worth of the existing machine two years from](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4d8d73e2-0b6b-48a1-bc9e-21ffd8131f2a%2F6ff5c7a9-500b-4e79-a162-dc0226999d85%2F7g1f6dl_processed.png&w=3840&q=75)
Transcribed Image Text:A machine that cost $120,000 3 years ago can be sold now for $52,750. Its market value is expected to be $40,000 and $20,000 1
year and 2 years from now, respectively. Its operating cost was $18,000 for the first 3 years of its life, but the M&O cost is expected to
be $23,000 for the next 2 years. A new improved machine that can be purchased for $136,750 will have an economic life of 5 years,
and an operating cost of $9,000 per year, and a salvage value of $32,000 whenever it is replaced. At an interest rate of 10% per year,
determine if the presently owned machine should be replaced now, 1 year from now, or 2 years from now.
The annual worth of the existing machine one year from now is $-
now is $-
], and the annual worth of the new machine is $-
The presently owned machine should be replaced (Click to select)
the annual worth of the existing machine two years from
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