Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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 A conveyor system was purchased three years ago for $60,000 with an expected useful life of 10 years and no expected salvage value.  Due to a change in product configuration, the conveyor system must be upgraded at a cost of $20,000.  Maintenance on this system is approximately $4000 per year and the current system has a market value of $2000.  Alternatively, the current system can be replaced with new equipment costing $65,000, with operating costs of $1,000 per year and an expected salvage of $10,000 after 7 years.  Determine whether the company should keep or replace the defender now at an MARR of 15% per year.  The current system is the Defender and the new system is the Challenger.

 

What is the annual worth of the challenger?

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