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.)

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

Section: Chapter Questions

Problem 1QTC

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The replacement of a planning machine is being considered by the Reardorn Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $32,000 for installation and will have an estimated economic life of 11 years and a $1,800 MV at that time. It is estimated that annual expenses will average $16,000 per year. The defender has a present BV of $6,000 and a present MV of $3500. Data for the defender for the next three years are given below. Using a before-tax interest rate of 12% per year, make a comparison to determine whether it is economical to make the replacement now. MV at End of BV at End of Expenses during Year Year the Year $ - 1,500 $4,500 $18,000 - 2,000 3,000 1 2 22,000 3 - 2,500 1,500 26,000 Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year. Year Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year 1 2 3 EUAC $ $ SA