A textile processing company is evaluating whether it should retain the current bleaching process that uses chlorine dioxide or replace it with a proprietary oxypure process. The relevant information for each process is shown. Use an interest rate of 15% per year to perform the replacement study. Additionally, write the PMT functions that display the information necessary to make the decision. Process Current Oxypure Original cost 6 years ago, $ 450,000 — Investment cost now, $ — 600,000 Current market value, $ 25,000 — Annual operating cost, $/year 190,000 70,000 Remaining life, years 3 10 Salvage value, $ 0 50,000
A textile processing company is evaluating whether it should retain the current bleaching process that uses chlorine dioxide or replace it with a proprietary oxypure process. The relevant information for each process is shown. Use an interest rate of 15% per year to perform the replacement study. Additionally, write the PMT functions that display the information necessary to make the decision. Process Current Oxypure Original cost 6 years ago, $ 450,000 — Investment cost now, $ — 600,000 Current market value, $ 25,000 — Annual operating cost, $/year 190,000 70,000 Remaining life, years 3 10 Salvage value, $ 0 50,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
A textile processing company is evaluating
whether it should retain the current bleaching process
that uses chlorine dioxide or replace it with a
proprietary oxypure process. The relevant information
for each process is shown. Use an interest
rate of 15% per year to perform the replacement study. Additionally, write the PMT functions that
display the information necessary to make the
decision.
Process Current Oxypure
Original cost 6 years ago, $ 450,000 —
Investment cost now, $ — 600,000
Current market value, $ 25,000 —
Annual operating cost, $/year 190,000 70,000
Remaining life, years 3 10
Salvage value, $ 0 50,000
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