The replacement of a laser cutting machine is being considered. The best available machine on market has an estimated economic life of 12 years with an equivalent annual worth of S-22,800. The current used machine, which was bought three years ago for $36,000, has a present market value of $4,000 with the following data for the next three years: oC Estimated Market Value Year S per Year at End of Year, $ 1 20,000 3,000 2 25,000 2,500 30,000 2,000 Select when to replace the machine, using Economic Service Life method at an interest rate of 4% per year, O Replace now O Replace in year one O Replace in year two O Replace in year three
The replacement of a laser cutting machine is being considered. The best available machine on market has an estimated economic life of 12 years with an equivalent annual worth of S-22,800. The current used machine, which was bought three years ago for $36,000, has a present market value of $4,000 with the following data for the next three years: oC Estimated Market Value Year S per Year at End of Year, $ 1 20,000 3,000 2 25,000 2,500 30,000 2,000 Select when to replace the machine, using Economic Service Life method at an interest rate of 4% per year, O Replace now O Replace in year one O Replace in year two O Replace in year three
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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