Machine A was purchased last year for$19,500 and had an estimated MV of$3,500 at the end of its seven-year life. Annual operating costs are$2,100. The machine will perform satisfactorily over the next six years. A salesman for another company is offering a replacement, Machine B, for$13,700, with an MV of$1,300 after six years. Annual operating costs for Machine B will only be$1,300. A trade-in allowance of$9,600 has been offered for Machine A. If the before-tax MARR is 6% per year, should you buy the new machine? Machine A was purchased last year for $19,500 and had an estimated MV of $3.500 at the end of its seven year life. Annual operating costs are $2,100. The machine will perform satisfactorily over the next six years. A salesman for another company is offering replacement, Mlachine 0, for $13,.700. with an MV of $1,300 aller six years. Arnual operaling cosls for Machine B will only be $1 300. A trade-in allowance of $9,600 has boen offered for Machine A. If ixe before-tax MARR is 5% per year, shouid you buy the new machine? A Cick the icon to view the interest and ennuity table for discrete compounding when MARR - 6% per year Chouse the vorect answer beluw. O. Yes, purchase Machine B O. No, continue with Machine A

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Machine A was purchased last year for $19,500 and had an estimated MV of $3,500 at the end of its seven-year life. Annual operating costs are $2,100. The machine will perform satisfactorily over the next six years. A salesman for another company is offering a replacement, Machine B, for $13,700, with an MV of $1,300 after six years. Annual operating costs for Machine B will only be $1,300. A trade-in allowance of $9,600 has been offered for Machine A. If the before-tax MARR is 6% per year, should you buy the new machine? Machine A was purchased last year for $19,500 and had an estimated MV of $3.500 at the end of its seven year life. Annual operating costs are $2,100. The machine will perform satisfactorily over the next six years. A salesman for another company is offering replacement, Mlachine 0, for $13,.700. with an MV of $1,300 aller six years. Arnual operaling cosls for Machine B will only be $1 300. A trade-in allowance of $9,600 has boen offered for Machine A. If ixe before-tax MARR is 5% per year, shouid you buy the new machine? A Cick the icon to view the interest and ennuity table for discrete compounding when MARR - 6% per year Chouse the vorect answer beluw. O. Yes, purchase Machine B O. No, continue with Machine A

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