Engineering economic class (Q2) 2. Pace Corporation in Cookeville, Tennessee bou

Question

Engineering economic class (Q2)
2. Pace Corporation in Cookeville, Tennessee bought production equips ment 2 years ago for $38,000. The equipment was spent $15,000 a year ago. It is recommended by the plant expected to last for 5 years and the salvage value was estimated to be $4,000 at the end of its useful life. Unfortunately the equipment did not perform satisfactorily and the company engineer that the equipment be either upgraded now for another S12,000 or replaced with equipment now. If the equipment is replaced now, it can be sold for $8,000. In conducting a replacement analysis, the cost of the defender to be used is equal to: (10 pts, no partial credit) A. $38,000 B. S35,000 C. $27,000 D. S8,000

Explanation / Answer

C) $27,000

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