A defender was installed 10 years ago at a capital investment cost of $77,000. It presently has a market value of $15,000. If kept, the defender has an economic life of three years, operating expenses of$13,500 per year, and a market value of $9,000 at the end of year (EOY) three. The defender is being depreciated by the straight line method using a 15-year write-off period with an estimated salvage valuefor depreciation purposes of $11,000.As an alternative, the defender can be replaced with a challenger which will cost $65,000 to install, have operating expenses of $9,500 per year, and have a final market value of $9,000 at the end of its20-year economic life. If the replacement is made, the challenger will be depreciated with the straight line method over a 20-year life with an estimated salvage value of $9,000 at EOY 20. Such equipment(defender or challenger) will be needed indefinitely. If the after-tax MARR is 9% per year and the effective income tax rate is 25%, should the defender or the challenger be recommended?Click the icon to view the interest and annuity table for discrete compounding when MARR = 9% per year.The AW value for the defender is $(Round to the nearest dollar.)The AW value for the challenger is $(Round to the nearest dollar.)The defender should be

nder was installed 10 years ago at a capital investment cost of $77,000. It presently has a market value of $15,000. If kept, the defender has an economic life of three years, operat 0 per year, and a market value of $9,000 at the end of year (EOY) three. The defender is being depreciated by the straight line method using a 15-year write-off period with an estir reciation purposes of $11,000. alternative, the defender can be replaced with a challenger which will cost $65,000 to install, have operating expenses of $9,500 per year, and have a final market value of $9,000 a r economic life. If the replacement is made, the challenger will be depreciated with the straight line method over a 20-year life with an estimated salvage value of $9,000 at EOY 20 der or challenger) will be needed indefinitely. If the after-tax MARR is 9% per year and the effective income tax rate is 25%, should the defender or the challenger be recommended lick the icon to view the interest and annuity table for discrete compounding when MARR = 9% per year. V value for the defender is $ (Round to the nearest dollar.) V value for the challenger is $- (Round to the nearest dollar.) fender should be

nder was installed 10 years ago at a capital investment cost of $77,000. It presently has a market value of $15,000. If kept, the defender has an economic life of three years, operat 0 per year, and a market value of $9,000 at the end of year (EOY) three. The defender is being depreciated by the straight line method using a 15-year write-off period with an estir reciation purposes of $11,000. alternative, the defender can be replaced with a challenger which will cost $65,000 to install, have operating expenses of $9,500 per year, and have a final market value of $9,000 a r economic life. If the replacement is made, the challenger will be depreciated with the straight line method over a 20-year life with an estimated salvage value of $9,000 at EOY 20 der or challenger) will be needed indefinitely. If the after-tax MARR is 9% per year and the effective income tax rate is 25%, should the defender or the challenger be recommended lick the icon to view the interest and annuity table for discrete compounding when MARR = 9% per year. V value for the defender is $ (Round to the nearest dollar.) V value for the challenger is $- (Round to the nearest dollar.) fender should be

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of $90,000. The machine had an expected life of 10 years at the time of purchase, and it is being depreciated by the straight-line method by $9,000 per year. If the machine is not replaced, it can be sold for $10,000 at the end of its useful life. A new machine can be purchased for $150,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $40,000 per year. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. The new machine is eligible for 100% bonus depreciation at the time of purchase. The old machine can be sold today for $50,000. The firm's tax rate is 25%. The appropriate WACC is 9%. If the new machine is purchased, what is the amount of the initial cash flow at Year 0 after bonus depreciation is considered? Cash outflow should be indicated by a minus sign. Round your answer to the…
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A company bought a generating set (or Genset) years ago at P5M and is now fully depreciated. It plans to fix it at a cost of P2,731,809 so that it would still have 6-year life remaining and be annually operated at a cost of P1,511,338 and be sold by the end of its life at P400,000. Simultaneously, it will buy a medium-sized Genset at a cost of P2.5M to be operated at P0.25M annually, and a salvage value of P0.35M at the end of 7 years. Leasing is the 2nd option having an annual payment of P1.4M and the initial payment of P0.1M, lasting for 4 years. What is the Annual Equivalent Cost of the 1st Option when interest is 22% cpd.-annually?
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