Hannifin CNG Fuel Dispensers needs to purchase replacement equipment to streamline one of its production lines for a new contract, but may sell the equipment before its expected life is reached at an estimated market value for used equipment. At MARR = 15% per year, select the better option using a future worth analysis over (a) the expected usage period, and (b) the maximum life, when the salvage values are expected to be 50% of the market values for used equipment. Are the selections the same for both plans? Option D E First cost, $ −62,000 −77,000 AOC, $ per year −15,000 −21,000 Expected market value, $ 8,000 10,000 Expected use, years 3 6 Maximum life, years 4 8
Hannifin CNG Fuel Dispensers needs to purchase
replacement equipment to streamline one of its
production lines for a new contract, but may sell
the equipment before its expected life is reached at
an estimated market value for used equipment. At
MARR = 15% per year, select the better option
using a future worth analysis over (a) the expected
usage period, and (b) the maximum life, when the
salvage values are expected to be 50% of the market
values for used equipment. Are the selections
the same for both plans?
Option D E
First cost, $ −62,000 −77,000
AOC, $ per year −15,000 −21,000
Expected market value, $ 8,000 10,000
Expected use, years 3 6
Maximum life, years 4 8
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