Given the following table of cost data: MARR = 15% APR Market Value, MV MV(0) MV(N). $14,000 $2,000 $50,000 $5,000 $45,000 Machine Current O Yes O No Improved Answer the following. a. Should the current machine be replaced immediately? FC dollars/yr. AOC $8,000 $3,750 dollars/yr. Useful Life, N 10 more b. What is the TAW associated with the current machine and the decision in part a? years 15 years c. What is the TAW associated with the improved machine and the decision for replacement in part a? d. What assumption is implied in order to calculate the results for parts b and c?
Given the following table of cost data: MARR = 15% APR Market Value, MV MV(0) MV(N). $14,000 $2,000 $50,000 $5,000 $45,000 Machine Current O Yes O No Improved Answer the following. a. Should the current machine be replaced immediately? FC dollars/yr. AOC $8,000 $3,750 dollars/yr. Useful Life, N 10 more b. What is the TAW associated with the current machine and the decision in part a? years 15 years c. What is the TAW associated with the improved machine and the decision for replacement in part a? d. What assumption is implied in order to calculate the results for parts b and c?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Given the following table of cost data:
MARR =
15% APR
Market Value, MV
MV(0)
MV(N).
$14,000 $2,000 $50,000
$5,000 $45,000
Machine
Current
Improved
Answer the following.
a. Should the current machine be replaced immediately?
OYes
O No
FC
dollars/yr.
AOC
dollars/yr.
$8,000
$3,750
Useful
Life, N
10 more
years
15
b. What is the TAW associated with the current machine and the decision in part a?
years
c. What is the TAW associated with the improved machine and the decision for replacement in part a?
d. What assumption is implied in order to calculate the results for parts b and c?
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