K An old forklift is due for a replacement analysis. It has a current market value $10,000. The market values and operation and maintenance costs for each of the remaining years of service are given below. The MARR is 17% per year. (a) Complete the table of marginal costs of the old forklift for each of the remaining years of service. (b) If the challenger has a minimum EUAC of $7,415, answer the two additional questions. Year 1 (a) Fill in the table below. (Round to the nearest dollar.) Forklift (Defender) MV at EOY $6,000 5,000 4,000 2,000 Click the icon to view the interest and annuity table for discrete compounding when MARR = 17% per year. Year 1 2 3 4 O&M Costs COL $4,000 4,000 4,500 5,500 Marginal Cost $

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### Replacement Analysis for Forklift

An old forklift is undergoing a replacement analysis with the following details:

- **Current Market Value**: $10,000
- **Minimum Attractive Rate of Return (MARR)**: 17% per year

The task is to evaluate the marginal costs over the remaining service years and compare it to a challenger with a minimum Equivalent Uniform Annual Cost (EUAC) of $7,415.

#### Given Data for Forklift (Defender)

- **Year 1**: 
  - Market Value (MV) at End of Year (EOY): $6,000
  - Operation & Maintenance (O&M) Costs: $4,000
- **Year 2**: 
  - MV at EOY: $5,000
  - O&M Costs: $4,000
- **Year 3**: 
  - MV at EOY: $4,000
  - O&M Costs: $4,500
- **Year 4**: 
  - MV at EOY: $2,000
  - O&M Costs: $5,500

#### Instructions:

(a) **Complete the table of marginal costs** of the old forklift for each of the remaining years of service, rounding to the nearest dollar.

| Year | Marginal Cost |
|------|---------------|
| 1    | $____         |
| 2    | $____         |
| 3    | $____         |
| 4    | $____         |

- Fill in the table with calculations based on MV and O&M costs provided.
- Consider the 17% MARR for interest and annuity table calculations as needed.

(b) **Assess Replacement Decision**:
- Utilize the calculated marginal costs to determine if the current forklift should be replaced, given that the challenger has an EUAC of $7,415.

> **Note**: To view detailed calculations involving discrete compounding based on a 17% MARR, please refer to the corresponding financial tables or use appropriate financial tools or software.
Transcribed Image Text:### Replacement Analysis for Forklift An old forklift is undergoing a replacement analysis with the following details: - **Current Market Value**: $10,000 - **Minimum Attractive Rate of Return (MARR)**: 17% per year The task is to evaluate the marginal costs over the remaining service years and compare it to a challenger with a minimum Equivalent Uniform Annual Cost (EUAC) of $7,415. #### Given Data for Forklift (Defender) - **Year 1**: - Market Value (MV) at End of Year (EOY): $6,000 - Operation & Maintenance (O&M) Costs: $4,000 - **Year 2**: - MV at EOY: $5,000 - O&M Costs: $4,000 - **Year 3**: - MV at EOY: $4,000 - O&M Costs: $4,500 - **Year 4**: - MV at EOY: $2,000 - O&M Costs: $5,500 #### Instructions: (a) **Complete the table of marginal costs** of the old forklift for each of the remaining years of service, rounding to the nearest dollar. | Year | Marginal Cost | |------|---------------| | 1 | $____ | | 2 | $____ | | 3 | $____ | | 4 | $____ | - Fill in the table with calculations based on MV and O&M costs provided. - Consider the 17% MARR for interest and annuity table calculations as needed. (b) **Assess Replacement Decision**: - Utilize the calculated marginal costs to determine if the current forklift should be replaced, given that the challenger has an EUAC of $7,415. > **Note**: To view detailed calculations involving discrete compounding based on a 17% MARR, please refer to the corresponding financial tables or use appropriate financial tools or software.
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