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AW Value, Retention Period, Years $ per Year 1 -92,000 - 86,000 3 -85,000 4 -89,000 -95,000

AW Value, Retention Period, Years $ per Year 1 -92,000 - 86,000 3 -85,000 4 -89,000 -95,000

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The AW values for retaining a presently owned machine for additional years are shown in the table. (Note that the values are the AW amount per each of the n years that the asset is kept.) A challenger has an economic service life of 7 years with an AWC =$-86,000 per year. Assuming future costs remain as estimated for the replacement study, what is the economic service life of the defender, if the company’s MARR is 12% per year? Assume used machines like the one presently owned will always be available.

AW Value, Retention Period, Years $ per Year 1 -92,000 - 86,000 3 -85,000 4 -89,000 -95,000
Transcribed Image Text:AW Value, Retention Period, Years $ per Year 1 -92,000 - 86,000 3 -85,000 4 -89,000 -95,000
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