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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DBS Builders Pte Ltd purchased an asphalt paver eight years ago for $280,000. The estimated operation and maintenance (O&M) costs for the next three years are $56,000, $68,000, and $82,000, respectively. The asphalt paver can be sold for $65,000 now, for $57,000 next year, for $45,000 two years from now, and for $28,000 three years from now. 4. The latest asphalt paver in the market costs $290,000 and has an estimated service life of five years. The salvage value is estimated to be $50,000 after five years. The expected annual O&M costs will be $6,000 for the first year and increase by $3,800 per year thereafter. If a before-tax minimum attractive rate of return (MARR) of 12% is estimated, what replacement decision should DBS Builders make?
Define replacement analysis
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GIL internet services record customer usage patterns. Historically they have found the duration of an internet session is normally distributed with an average duration of 77.5 minutes and a standard deviation of 20.6 minutes. What is the probability a randomly selected session would last longer than two hours or less than thirty-five minutes? (4 decimal places)
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