Engineering Economics (Replacement Analysis): Please answer the following provide explaination and Solution Take not USE ₱eso SIGN Clin Corporation has an overhead crane that has an estimated remaining life of 10 years. The crane can be sold now for ₱800,000. If the crane is kept in service, it must be overhauled immediately at the cost of ₱400,000. Operating and maintenance costs will ₱300,000 per year after the crane is overhauled. The overhauled crane will have zero market value at the end of the 10-year study period. A new crane will cost ₱1.8M and can last for 10 years with a market value of ₱400,000 at that time. Operating and maintenance costs are ₱100,000 per year for the new crane. The company uses an after-tax interest rate of 10% per year in evaluating investment alternatives. Should the company replace the old crane?

Engineering Economics (Replacement Analysis): Please answer the following provide explaination and Solution Take not USE ₱eso SIGN Clin Corporation has an overhead crane that has an estimated remaining life of 10 years. The crane can be sold now for ₱800,000. If the crane is kept in service, it must be overhauled immediately at the cost of ₱400,000. Operating and maintenance costs will ₱300,000 per year after the crane is overhauled. The overhauled crane will have zero market value at the end of the 10-year study period. A new crane will cost ₱1.8M and can last for 10 years with a market value of ₱400,000 at that time. Operating and maintenance costs are ₱100,000 per year for the new crane. The company uses an after-tax interest rate of 10% per year in evaluating investment alternatives. Should the company replace the old crane?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 8E

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Engineering Economics (Replacement Analysis): Please answer the following provide explaination and Solution Clin Corporation has an overhead crane that has an estimated remaining life of 10 years. The crane can be sold now for ₱800,000. If the crane is kept in service, it must be overhauled immediately at the cost of ₱400,000. Operating and maintenance costs will ₱300,000 per year after the crane is overhauled. The overhauled crane will have zero market value at the end of the 10-year study period. A new crane will cost ₱1.8M and can last for 10 years with a market value of ₱400,000 at that time. Operating and maintenance costs are ₱100,000 per year for the new crane. The company uses an after-tax interest rate of 10% per year in evaluating investment alternatives. Should the company replace the old crane?
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