A critical machine in a copper refining operation was purchased 7 years ago for

Question

A critical machine in a copper refining operation was purchased 7 years ago for dollar 36,000. Last year a replacement study was performed with the decision to retain for 3 more years. The situation has changed. The equipment is now estimated to have a value of dollar 3000. if "scav­enged" for parts now or anytime in the future. If kept in service, it can be minimally upgraded at a cost of dollar 12,000, which will make it usable for up to 2 more year. Its operating cost is expected to be dollar 22,000 the first year and dollar 25,000 the second year. Alternatively, the company can purchase a new system that will have an equivalent annual worth of dollar-29,630 per year. The company uses a MARK of 18 percent per year. When should the company replace the machine? For this problem choose the correct answer below Select one: a. AW_D1 is close to - 25,760 With the given AW_C of - 29,630 the company should replace the machine now. The defender ESL is n = 1 year AW_D2 is close to - 43,000

Explanation / Answer

B. with the given AWc of - 29630 the company should replace the machine now

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