A biotech company planning a plant expansion is trying to determine whether it should upgrade the existing controlled-environment rooms or purchase new ones. The presently owned rooms were purchased 4 years ago for $250,000. They have a current “quick sale” value of $30,000. However, for an investment of $100,000 now, they can be adequate for another 4 years, after which they could be sold for an estimated $40,000. Alternatively, new controlled-environment rooms cost $300,000, have an expected 10-year economic life, and a $50,000 salvage value after that time. Determine whether the company should upgrade the existing controlled-environment rooms or purchase new ones. Use a MARR of 12% per year and assume that used controlled-environment rooms will always be available.
A biotech company planning a plant expansion is trying to determine whether it should upgrade the existing controlled-environment rooms or purchase new ones. The presently owned rooms were purchased 4 years ago for $250,000. They have a current “quick sale” value of $30,000. However, for an investment of $100,000 now, they can be adequate for another 4 years, after which they could be sold for an estimated $40,000. Alternatively, new controlled-environment rooms cost $300,000, have an expected 10-year economic life, and a $50,000 salvage value after that time. Determine whether the company should upgrade the existing controlled-environment rooms or purchase new ones. Use a MARR of 12% per year and assume that used controlled-environment rooms will always be available.
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