New microelectronics testing equipment was purchased 2 years ago by Mytesmall Industries at a cost of $600,000. At that time, it was expected to be used for 5 years and then traded or sold for its salvage value of $75,000. Expanded business in newly developed international markets is forcing the decision to trade now for a new unit at a cost of $800,000. The current equipment could be retained, if necessary, for another 2 years, at which time it would have a $5000 estimated market value. The current unit is appraised at $350,000 on the international market, and if it is used for another 2 years, it will have M&O costs (exclusive of operator costs) of $125,000 per year. Determine the values of P, n, S, and AOC for this defender if a replacement analysis were performed today. P = market value =$350,000 AOC = $125,000 per year n = 2 years S = $5,000
New microelectronics testing equipment was purchased 2
years ago by Mytesmall Industries at a cost of $600,000. At
that time, it was expected to be used for 5 years and then
traded or sold for its salvage value of $75,000. Expanded
business in newly developed international markets is forcing
the decision to trade now for a new unit at a cost of
$800,000. The current equipment could be retained, if
necessary, for another 2 years, at which time it would have a
$5000 estimated market value. The current unit is appraised
at $350,000 on the international market, and if it is used for
another 2 years, it will have M&O costs (exclusive of
operator costs) of $125,000 per year. Determine the values
of P, n, S, and AOC for this defender if a replacement
analysis were performed today.
P = market value =$350,000
AOC = $125,000 per year
n = 2 years
S = $5,000
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