An asset costing $10,000 has the salvage values and operating cost shown below. Using 8%, when should the asset be replaced with an identical part? End of Year Salvage Operating Cost 1 6000 2300 2 4000 2500 3 3200 3300 4 2500 4800 5 2000 6800 6 1800 9500 7 1700 12,000

An asset costing $10,000 has the salvage values and operating cost shown below. Using 8%, when should the asset be replaced with an identical part? End of Year Salvage Operating Cost 1 6000 2300 2 4000 2500 3 3200 3300 4 2500 4800 5 2000 6800 6 1800 9500 7 1700 12,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 2P

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Question

An asset costing $10,000 has the salvage values and operating cost shown below. Using 8%, when should the asset be replaced with an identical part?

End of Year	Salvage	Operating Cost
1	6000	2300
2	4000	2500
3	3200	3300
4	2500	4800
5	2000	6800
6	1800	9500
7	1700	12,000

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