- Equipment purchased 2 years ago by Newport Corporation to make pneumatic vibration isolators cost $85000. It has a market value that can be described by the relation $85000 – $8800k, where k is the years from time of purchase. The operating cost for the first 5 years is $59000 per year, after which it increases by $6000 per year. The asset's salvage value was originally estimated to be $7000 after a predicted 10-year useful life. Determine the values of P, S, and AOC if (a) a replacement study is done now and it is assumed that the equipment will be kept a maximum of one more year, and (b) a replacement study is done 5.00 years from now and it is assumed that the equipment will be kept a maximum of only one more year after that. a) The value of P is $ The value of S is $ The value of AOC is $ b) The value of P is $ The value of S is $ The value of AOC is $

- Equipment purchased 2 years ago by Newport Corporation to make pneumatic vibration isolators cost $85000. It has a market value that can be described by the relation $85000 – $8800k, where k is the years from time of purchase. The operating cost for the first 5 years is $59000 per year, after which it increases by $6000 per year. The asset's salvage value was originally estimated to be $7000 after a predicted 10-year useful life. Determine the values of P, S, and AOC if (a) a replacement study is done now and it is assumed that the equipment will be kept a maximum of one more year, and (b) a replacement study is done 5.00 years from now and it is assumed that the equipment will be kept a maximum of only one more year after that. a) The value of P is $ The value of S is $ The value of AOC is $ b) The value of P is $ The value of S is $ The value of AOC is $

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 1.1CE: What life cycle cost concept begins raising concerns by year 5 with any electric vehicle (EV)? If...

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