Salim Service company owns several taxis that were purchased four years ago for $27000 each. The current market value is $10000 each. If they are kept for another 6 years, they can be sold for $2000 each. The annual maintenance cost per cab is $900 a year. Salim Service is looking at replacing the cabs with the option to lease new cabs at an annual cost of $9000 per year per cab which includes free maintenance. How much more would it cost them per year to switch to leasing? Assume an interest rate of 9%.

A diesel generator for electrical power can be purchased by a remote community for $350,000 and used for 10 years, when its salvage value is $50,000. Alternatively, it can be leased for $42,500 a year. (Remember that lease payments occur at the start of the year.) The community’s interest rate is 7%.(a) What is the interest rate for buying versus leasing? Which is the better choice?(b) The community will spend $80,000 less each year for fuel and maintenance, than it currently spends on buying power. Should it obtain the generator? What is the rate of return for the generator using the best financing plan?   Solve it step by step.

There are two alternative machines for a manufacturing process. Both machines have the same output rate, but they differ in costs. Machine A costs $20,000 to set up and $8,000 per year to operate. It must be completely replaced every 3 years, and it has no salvage value. Machine B costs $50,000 to set up and $2,160 per year to operate. It should last for 5 years and has no salvage value. The costs of two machines are shown below.    0 1 2 3 4 5   Machine A 20,000 8,000 8,000 8,000       Machine B 50,000 2,160 2,160 2,160 2,160 2,160    Assuming the cost of capital is 10%,1. find the equivalent annual cost of Machine A in Box 1. Round it to a whole dollar, and no comma or the dollar sign.2. find the EAC of Machine B in Box 2. The same format as box 1.3. Based on the equivalent annual cost method, type in Box 3 which machine do you recommend, Machine A or Machine B.   Question 20 options: Blank # 1   Blank # 2   Blank #…

Can we take the Replacement Decisions when the required service period is long?