596) Based on estimates she obtained from vendor and A challenger has an economi

Question

596) Based on estimates she obtained from vendor and A challenger has an economic service life of 7 years with an AW of $ 86,000 per year. Assum, ing all future costs remain as estimated for the analysis, when should the company purchase the challenger, if the MARR is 12% per year? Assume used machines like the one presently owned will always be available. company records, an ehgineer with Haliburton calculated the AW values shown for retaining a presently owned machine additional years. AW Value $ per Yea -92,000 Retention: Period Years, 81,000 -87,000 -89,000 95,000 4

Explanation / Answer

The Company should never purchase the challenger, because its $-86000 is higher than the defender’s 2 year economic service life of $-81000.

The defender must be kept for 2 more years and the be replaced with another used machine same like the one currently owned.

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.