3 Machine A was purchased two years ago for $25,000 and had an estimated market
ID: 2614811 • Letter: 3
Question
3 Machine A was purchased two years ago for $25,000 and had an estimated market value of $3,000 at the end of its 10 years ife. Annual operating value of $5,000 after 10 years. Machine-B today by $8,000 The MARR. 8% cost is $1,900. Machine B has a cost of $35,000 with market annual operating cost of $1,500. Machine A could be sold a Using the outsider viewpoint, what is the (EUAG) equivalent uniform annual cost of continuing the use of Machine A? Using the outsider viewpoint, what is the (EUAC) equivalent uniform annual cost of buying the Machine B? d with Machine B Should Machine A be replace b. c.Explanation / Answer
Machine A
EUAC = $1,900 + $8,000(A/P,8,10) -$3,000(A/F,8,10)
EUAC = $1,900 + $8,000(0.149) -$3,000(0.069)
EUAC = 1,900 + 1,192 - 207 = $2,885
Machine B
EUAC = $1,500 + $35,000(A/P,8,10) -$5,000(A/F,8,10)
EUAC = $1,500 + $35,000(0.149) -$5,000(0.069)
EUAC = $1,500 + 5,215 - 345 = $6,370
No, Machine A should not be replaced as the EUAC of Machine A is lower than Machine B.
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