An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been developed for both the defender and the challenger. The company's before-tax MARR is 20% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for an indefinite period of time. Defender Challenger Current MV $38,000 $2,000 Purchase price $51,000 Required upgrade Annual expenses Remaining useful life Installation cost $5,500 $1,000 10 years $7,000 $1,400 Annual expenses 6 years Useful life MV at end of useful life -$1,500 MV at end of useful life Click the icon to view the interest and annuity table for discrete compounding when the MARR is 20% per year. The AW value of the defender is $. (Round to the nearest dollar.)

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been
developed for both the defender and the challenger. The company's before-tax MARR is 20% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for
an indefinite period of time.
Defender
Challenger
Current MV
$38,000
Purchase price
$51,000
Required upgrade
Annual expenses
$2,000
Installation cost
$5,500
$1,400
Annual expenses
$1,000
6 years
10 years
$7,000
Remaining useful life
Useful life
MV at end of useful life
- $1,500
MV at end of useful life
Click the icon to view the interest and annuity table for discrete compounding when the MARR is 20% per year.
The AW value of the defender is $. (Round to the nearest dollar.)
Transcribed Image Text:An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been developed for both the defender and the challenger. The company's before-tax MARR is 20% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for an indefinite period of time. Defender Challenger Current MV $38,000 Purchase price $51,000 Required upgrade Annual expenses $2,000 Installation cost $5,500 $1,400 Annual expenses $1,000 6 years 10 years $7,000 Remaining useful life Useful life MV at end of useful life - $1,500 MV at end of useful life Click the icon to view the interest and annuity table for discrete compounding when the MARR is 20% per year. The AW value of the defender is $. (Round to the nearest dollar.)
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