A company purchased a piece of equipment five years ago. A new piece of machinery is being considered for the assembly line because of increasing maintenance costs for this equipment. The cost characteristics of the old equipment and the proposed replacement are shown below: Old Equipment Proposed Replacement Original cost = $18.000 Maintenance = S1000 in year one(four years ago) increasing by $200 per year Market Value(MV) at end of life = 0 Original estimated life = nine years Suppose a $12.000 MV is available now for the old equipment. Perform a before-tax analysis, using a before tax MARR of 12%, with NAW-C or EUAC to determine which alternative to select. Be sure to utilize a uniform gradient in your analysis of the old equipment and account for all cash flows. Purchase cost = $21,000 Maintenance = $250 per year Market Value(MV) at end of life = $5.000 Estimated life = five years

A company purchased a piece of equipment five years ago. A new piece of machinery is being considered for the assembly line because of increasing maintenance costs for this equipment. The cost characteristics of the old equipment and the proposed replacement are shown below: Old Equipment Proposed Replacement Original cost = $18.000 Maintenance = S1000 in year one(four years ago) increasing by $200 per year Market Value(MV) at end of life = 0 Original estimated life = nine years Suppose a $12.000 MV is available now for the old equipment. Perform a before-tax analysis, using a before tax MARR of 12%, with NAW-C or EUAC to determine which alternative to select. Be sure to utilize a uniform gradient in your analysis of the old equipment and account for all cash flows. Purchase cost = $21,000 Maintenance = $250 per year Market Value(MV) at end of life = $5.000 Estimated life = five years

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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