After 8 years of use, the heavy-truck engine-overhaul equipment at Pete's Truck Repair was evaluated for replacement. Pete's accountant used an after-tax minimum acceptable rate of return (MARR) of 8% per year. Te of 30%, and a current market value of $25,000 to determine AW = $2100. The new equipment costs $75,000, uses straight line (SL) depreciation over a 10-year recovery period, and has a $15,000 salvage estimate. The estimated cash flow before taxes (CFBT) is $15,000 per year. Pete asked his enginee son Ramon to determine if the new equipment should replace what is owned currently. From the accountant, Ramon learned the current equipment cost $20,000 when purchased and reached a zero book value several years ago. Help Ramon answer his father's question The annual worth of the challenger is determined to be $ The (Click to select) has a higher AW value and thus selected.

After 8 years of use, the heavy-truck engine-overhaul equipment at Pete's Truck Repair was evaluated for replacement. Pete's accountant used an after-tax minimum acceptable rate of return (MARR) of 8% per year. Te of 30%, and a current market value of $25,000 to determine AW = $2100. The new equipment costs $75,000, uses straight line (SL) depreciation over a 10-year recovery period, and has a $15,000 salvage estimate. The estimated cash flow before taxes (CFBT) is $15,000 per year. Pete asked his enginee son Ramon to determine if the new equipment should replace what is owned currently. From the accountant, Ramon learned the current equipment cost $20,000 when purchased and reached a zero book value several years ago. Help Ramon answer his father's question The annual worth of the challenger is determined to be $ The (Click to select) has a higher AW value and thus selected.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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