With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equalto that of machine Y at an interest rate of 12% per year. Determine the replacement value.Machine XMachine YMarket Value, $?93,000-40,000 for year 1,increasing by 2000 peryear thereafter.Annual Cost, $ per Year-57,000Salvage Value18,50020,000Life, Years3The replacement value is $

Answered: Machine X Machine Y Market Value, $…

Machine X Machine Y Market Value, $ 93,000 -40,000 for year 1,increasing by 2000 p year thereafter. Annual Cost, $ per Year -57,000 Salvage Value 18,500 20,000 Life, Years 3 5

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equal
to that of machine Y at an interest rate of 12% per year. Determine the replacement value.
Machine X
Machine Y
Market Value, $
?
93,000
-40,000 for year 1,increasing by 2000 per
year thereafter.
Annual Cost, $ per Year
-57,000
Salvage Value
18,500
20,000
Life, Years
3
The replacement value is $

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