Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine working in this environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago for $88, 000 and its operating cost for the next year is expected to be $67,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $54,000 per year. It is expected to have a $ 60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade - in value will make the challenger economically attractive? On equating the AW values of the defender and the challenger, to calculate the minimum trade - in value of the challenger, the spreadsheet tool that should be used is GOAL SEEK. The minimum trade - in value that will make the challenger economically attractive will be $54, 703.96. Give correct answer Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine working in this environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago for $88,000 and its operating cost for the next year is expected to be $67,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $54,000 per year. It is expected to have a $60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade-in value will make the challenger economically attractive? On equating the AW values of the defender and the challenger, to calculate the minimum trade-in value of the challenger, the spreadsheet tool that should be used is GOAL SEEK The minimum trade-in value that will make the challenger economically attractive will be $ 54,703.96
Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine working in this environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago for $88, 000 and its operating cost for the next year is expected to be $67,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $54,000 per year. It is expected to have a $ 60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade - in value will make the challenger economically attractive? On equating the AW values of the defender and the challenger, to calculate the minimum trade - in value of the challenger, the spreadsheet tool that should be used is GOAL SEEK. The minimum trade - in value that will make the challenger economically attractive will be $54, 703.96. Give correct answer Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine working in this environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago for $88,000 and its operating cost for the next year is expected to be $67,000. A more corrosion-resistant challenger will cost $226,000 with an operating cost of $54,000 per year. It is expected to have a $60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade-in value will make the challenger economically attractive? On equating the AW values of the defender and the challenger, to calculate the minimum trade-in value of the challenger, the spreadsheet tool that should be used is GOAL SEEK The minimum trade-in value that will make the challenger economically attractive will be $ 54,703.96
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine
working in this environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped.
It was purchased 3 years ago for $88, 000 and its operating cost for the next year is expected to be $67,000. A more
corrosion-resistant challenger will cost $226,000 with an operating cost of $54,000 per year. It is expected to have a $
60,000 salvage value after its 10-year ESL. At an interest rate of 15% per year, what minimum trade - in value will
make the challenger economically attractive? On equating the AW values of the defender and the challenger, to
calculate the minimum trade - in value of the challenger, the spreadsheet tool that should be used is GOAL SEEK. The
minimum trade - in value that will make the challenger economically attractive will be $54, 703.96. Give correct answer
Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment. A mixing machine working in this
environment is deteriorating fast and can be used for only 1 more year, at which time it will be scrapped. It was purchased 3 years ago
for $88,000 and its operating cost for the next year is expected to be $67,000. A more corrosion-resistant challenger will cost
$226,000 with an operating cost of $54,000 per year. It is expected to have a $60,000 salvage value after its 10-year ESL. At an
interest rate of 15% per year, what minimum trade-in value will make the challenger economically attractive?
On equating the AW values of the defender and the challenger, to calculate the minimum trade-in value of the challenger,
the spreadsheet tool that should be used is GOAL SEEK
The minimum trade-in value that will make the challenger economically attractive will be $ 54,703.96
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