Newport Corporation purchased equipment for making pneumatic vibration isolators at a cost of $90,000 two yecars ago. It has a market value that can be described by the relation $90,000- 8000k, where k is the years from time of purchase. Experience with this type of equipment has shown that the operating cost for the first 4 years is $65,000 per year, after which it increases by $6300 per year. The asset's salvage value was originally estimated to be 57000 after a prodicted 10-year useful life. Determine the market value today ifa replacement study is done now.

Newport Corporation purchased equipment for making pneumatic vibration isolators at a cost of $90,000 two yecars ago. It has a market value that can be described by the relation $90,000- 8000k, where k is the years from time of purchase. Experience with this type of equipment has shown that the operating cost for the first 4 years is $65,000 per year, after which it increases by $6300 per year. The asset's salvage value was originally estimated to be 57000 after a prodicted 10-year useful life. Determine the market value today ifa replacement study is done now.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 18P

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