Qd 175. A high-speed electronic assembly machine was purchased four years ago for $50,000. At the present time, it can be sold for $25,000 or it can be kept in service for one more year with cash flows as shown in thetable (defender). The potential challenger to replace this machine has a purchase price of $41,500 and a usefule life of not more than 2 years with cash flows as shown in the table. If the before-tax MARR is 20%, answerthe two questions below:Market Value$41.50034,000$9,00014,50025,000Click the icon to view the interest and annuity table for discrete compounding when the MARR is 20% per year.1. The EUAC of the challenger for the two years service isOA. $29,760OB. $30,300OC. $27,300OD. $24,800OE. $36,065Year012Challenger2. The marginal cost of keeping the defender in service for one more year isOA. $29,000OB. $24,000OC. $33,000O D. $11,400OE. $13,000O&M CostsDefenderMarket Value$25,00017,000O&M Costs$16,000

Life cycle of challenger = 2 year Life cycle of defender = 1 year LCM of life cycle = 2 1)…

1. The EUAC of the challenger for the two years of service is OA. $29,760 OB. $30,300 OC. $27,300 O D. $24,800 O E. $36,065 2. The marginal cost of keeping the defender in service for one more year is OA. $29,000 O B. $24,000 OC. $33,000 O D. $11,400 OE. $13,000

1. The EUAC of the challenger for the two years of service is OA. $29,760 OB. $30,300 OC. $27,300 O D. $24,800 O E. $36,065 2. The marginal cost of keeping the defender in service for one more year is OA. $29,000 O B. $24,000 OC. $33,000 O D. $11,400 OE. $13,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 14P

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