Randall-Rico Consultants, 5 years ago, purchased for $45,000 a microwave signal graphical plotter for corrosion detection in concrete structures. It is expected to have the market values and annual operating costs shown for its remaining useful life of up to 3 years. It could be traded now at an appraised market value of $8000. Year Market Value at End of Year, $ AOC, $ per Year 1 6000 −50,000 2 4000 −53,000 3 1000 −60,000 A replacement plotter with new Internet-based, digital technology costs $125,000, has an estimated salvage value of 8% of the purchase price after its 5-year life, and an AOC of 20% of its purchase price. At an interest rate of 15% per year, determine how many more years Randall-Rico should retain the present plotter.
Randall-Rico Consultants, 5 years ago, purchased
for $45,000 a microwave signal graphical
plotter for corrosion detection in concrete
structures. It is expected to have the market values
and annual operating costs shown for its remaining
useful life of up to 3 years. It could be
traded now at an appraised market value of
$8000.
Year
Market Value at
End of Year, $
AOC,
$ per Year
1 6000 −50,000
2 4000 −53,000
3 1000 −60,000
A replacement plotter with new Internet-based,
digital technology costs $125,000, has an estimated
salvage value of 8% of the purchase price
after its 5-year life, and an AOC of 20% of its purchase
price. At an interest rate of 15% per year,
determine how many more years Randall-Rico
should retain the present plotter.
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