Concurris Prototyping is committed to using the newest and finest equipment in its labs. Accordingly, Wilma, a senior engineer, has recommended that a 2-year-old piece of precision measurement equipment be replaced immediately. She believes it can be demonstrated that the proposed equipment is economically advantageous at a 15% -per year return and a planning horizon of 5 years. Perform the replacement analysis using the annual worth method, a 5-year study period, and the estimates below. Was Wilma correct? Current Proposed -39,000 -30,000 15,000 5 7,000 Equipment Original purchase price, $ Current market value, $ Remaining life, years Estimated value in 5 years, $ Salvage value after 15 years, $ AOC, $ per year The AW of the defender is $- 15 10,000 5,000 -3,000 -10,000 and the AW of the challenger is $-

Concurris Prototyping is committed to using the newest and finest equipment in its labs. Accordingly, Wilma, a senior engineer, has recommended that a 2-year-old piece of precision measurement equipment be replaced immediately. She believes it can be demonstrated that the proposed equipment is economically advantageous at a 15% -per year return and a planning horizon of 5 years. Perform the replacement analysis using the annual worth method, a 5-year study period, and the estimates below. Was Wilma correct? Current Proposed -39,000 -30,000 15,000 5 7,000 Equipment Original purchase price, $ Current market value, $ Remaining life, years Estimated value in 5 years, $ Salvage value after 15 years, $ AOC, $ per year The AW of the defender is $- 15 10,000 5,000 -3,000 -10,000 and the AW of the challenger is $-

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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