Digital Tech Dynamics purchased a new quality inspection system for $550,000. The estimated salvage value was $50,000 after 10years. Currently, the expected remaining life is 7 years with an AOC of $67,500 per year and an estimated salvage value of $40,000.The new president has recommended early replacement of the system with one that costs $430,000 and has a 12-year economicservice life, a $35,000 salvage value, and an estimated AOC of $50,000 per year. If the MARR for the corporation is 12% per year, usefactor-based relations to determine the minimum trade-in value necessary now to make the president's replacement economicallyadvantageous.The minimum trade-in value necessary now to make the president's replacement economically advantageous is $[

The minimum trade-in value refers to the amount that the employer would want to obtain for the…

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minimum trade-in value

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

Digital Tech Dynamics purchased a new quality inspection system for $550,000. The estimated salvage value was $50,000 after 10
years. Currently, the expected remaining life is 7 years with an AOC of $67,500 per year and an estimated salvage value of $40,000.
The new president has recommended early replacement of the system with one that costs $430,000 and has a 12-year economic
service life, a $35,000 salvage value, and an estimated AOC of $50,000 per year. If the MARR for the corporation is 12% per year, use
factor-based relations to determine the minimum trade-in value necessary now to make the president's replacement economically
advantageous.
The minimum trade-in value necessary now to make the president's replacement economically advantageous is $[

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