1. A piece of construction equipment was bought 3 years ago for $ 500,000, expected li: of 8 years and a salvage value of $20,000. The annual operating cost for this equipment is $58,000. It now can be sold for $200,000. An alternative piece of equipment can now be bought for $ 600,000, a salvage value of $150,000 and an expected life of 10 years. The annual operating cost for this equipment is $15,000. At MARR= 10% should we replace the old equipment? Use both EAC and P.W.

1. A piece of construction equipment was bought 3 years ago for $ 500,000, expected li: of 8 years and a salvage value of $20,000. The annual operating cost for this equipment is $58,000. It now can be sold for $200,000. An alternative piece of equipment can now be bought for $ 600,000, a salvage value of $150,000 and an expected life of 10 years. The annual operating cost for this equipment is $15,000. At MARR= 10% should we replace the old equipment? Use both EAC and P.W.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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