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The replacement of a planning machine is being considered by the Reardom Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will c0st $30.000 for installation and will have an estimated economic life of 12 years and a $2.000 MV at that time. It is estimated that an expenses will average $16,000 per year. The defender has a present BV of $6.000 and a present MV of $4000. Data for the defender for the next three years are given below. Using a before-tax interest rate of 15% per year, make a comparison to determine whether it is economical to make the replacement now. Year MV at End of BV at End of Expenses during the Year $20.000 25.000 30.000 Year $3.000 2.500 2.000 Year $4.500 2. 3. 3,000 1,500 O Click the icon to view the interest and annuity table for discrete compounding when i 15% per year. Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year EUAC 2 3

The replacement of a planning machine is being considered by the Reardom Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will c0st $30.000 for installation and will have an estimated economic life of 12 years and a $2.000 MV at that time. It is estimated that an expenses will average $16,000 per year. The defender has a present BV of $6.000 and a present MV of $4000. Data for the defender for the next three years are given below. Using a before-tax interest rate of 15% per year, make a comparison to determine whether it is economical to make the replacement now. Year MV at End of BV at End of Expenses during the Year $20.000 25.000 30.000 Year $3.000 2.500 2.000 Year $4.500 2. 3. 3,000 1,500 O Click the icon to view the interest and annuity table for discrete compounding when i 15% per year. Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year EUAC 2 3

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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All is calculated i need only last EUAC calculation

The replacement of a planning machine is being considered by the Reardom Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $30,000 for installation and will have an estimated economic life of 12 years and a $2,000 MV at that time. It is estimated that annual expenses will average $16,000 per year. The defender has a present BV of $6,000 and a present MV of $4000. Data for the defender for the next three years are given below. Using a before-tax interest rate of 15% per year, make a comparison to determine whether it is economical to make the replacement now. Year MV at End of BV at End of Expenses during Year Year the Year 1 $3,000 $4,500 $20.000 2 2.500 3,000 25.000 3 2,000 1,500 30,000 Click the icon to view the interest and annuity table for discrete compounding when i= 15% per year. Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year EUAC 1 2 3
Transcribed Image Text:The replacement of a planning machine is being considered by the Reardom Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $30,000 for installation and will have an estimated economic life of 12 years and a $2,000 MV at that time. It is estimated that annual expenses will average $16,000 per year. The defender has a present BV of $6,000 and a present MV of $4000. Data for the defender for the next three years are given below. Using a before-tax interest rate of 15% per year, make a comparison to determine whether it is economical to make the replacement now. Year MV at End of BV at End of Expenses during Year Year the Year 1 $3,000 $4,500 $20.000 2 2.500 3,000 25.000 3 2,000 1,500 30,000 Click the icon to view the interest and annuity table for discrete compounding when i= 15% per year. Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) Year EUAC 1 2 3
1 3 Expenses for the 20000 25000 30000 year PVIF at 12% 0.8928 0.7972 0.7118 PV of expenses 17856 19930 21354 Cumulative PV of 17856 37786 59140 expenses ΕΟΥ MV 3000 2500 2000 PV of MV 2678 1993 1423.6 Total PW 19178 39793 61716.4 (4000+Cum PV of expenses - PV of MV) P/A 0.893 1.690 2.402
Transcribed Image Text:1 3 Expenses for the 20000 25000 30000 year PVIF at 12% 0.8928 0.7972 0.7118 PV of expenses 17856 19930 21354 Cumulative PV of 17856 37786 59140 expenses ΕΟΥ MV 3000 2500 2000 PV of MV 2678 1993 1423.6 Total PW 19178 39793 61716.4 (4000+Cum PV of expenses - PV of MV) P/A 0.893 1.690 2.402
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