BioHealth, a biodevice systems leasing company, is considering a new equipment purchase to replace a currently owned asset that was purchased 2 years ago for $250,000. It is appraised at a current market value of only $50,000. An upgrade is possible for $200,000 now that would be adequate for another 3 years of lease rights, after which the entire system could be sold on the international circuit for an estimated $40,000. The challenger can be purchased at a cost of $300,000, has an expected life of 10 years, and has a $50,000 salvage value. Determine whether the company should upgrade or replace at a MARR of 12% per year. Assume the AOC estimates are the same for both alternatives
. BioHealth, a biodevice systems leasing company, is
considering a new equipment purchase to replace a
currently owned asset that was purchased 2 years
ago for $250,000. It is appraised at a current market
value of only $50,000. An upgrade is possible for
$200,000 now that would be adequate for another 3
years of lease rights, after which the entire system
could be sold on the international circuit for an
estimated $40,000. The challenger can be purchased
at a cost of $300,000, has an expected life of 10
years, and has a $50,000 salvage value. Determine
whether the company should upgrade or replace at a
MARR of 12% per year. Assume the AOC estimates
are the same for both alternatives
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
