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? Equipment Original purchase price, S Current market value, $ Remaining life, years Proposed -42,000 Estimated value in 5 years, $ Salvage value after 15 years, S AOC. $ per year The AW of the defender is $- Wilma (Click to select) correct Current -30,000 15,000 5 7,000 -13,000 T 15 10,000 5,000 -3,000 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? Equipment Original purchase price, S Current market value, $ Remaining life, years Proposed -42,000 Estimated value in 5 years, $ Salvage value after 15 years, S AOC. $ per year The AW of the defender is $- Wilma (Click to select) correct Current -30,000 15,000 5 7,000 -13,000 T 15 10,000 5,000 -3,000 and the AW of the challenger is $-
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![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?
Equipment
Original purchase price, $
Current market value, $
Remaining life, years
Proposed
-42,000
Estimated value in 5 years, S
Salvage value after 15 years. $
AOC. $ per year
The AW of the defender is $-
Wilma (Click to select) correct.
Current
-30,000
15,000
5
7,000
F
-13,000
15
10,000
5.000
-3,000
and the AW of the challenger is $-](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff3c028ad-204b-4c9d-b722-7ff5c8f32126%2F8165f504-3021-41fc-8bba-15b3adab3bae%2F6b1dr9s_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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?
Equipment
Original purchase price, $
Current market value, $
Remaining life, years
Proposed
-42,000
Estimated value in 5 years, S
Salvage value after 15 years. $
AOC. $ per year
The AW of the defender is $-
Wilma (Click to select) correct.
Current
-30,000
15,000
5
7,000
F
-13,000
15
10,000
5.000
-3,000
and the AW of the challenger is $-
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