The replacement of a laser cutting machine is being considered. The best available machine on market has an estimated economic life of 12 years with an equivalent annual worth of 5-24,800. The current used machine, which was bought six years ago for $48,000, has a present market value of $4,000 with the following data for the next three years: Estimated Market Value at End of Year, S Year S per Year 20,000 3,000 25,000 2,500 30,000 2,000 Select when to replace the machine, using Economic Service Life method at an interest rate of 4% per year. O a) Replace now O b) Replace in year one O ) Replace in year two O O Replace in year three
The replacement of a laser cutting machine is being considered. The best available machine on market has an estimated economic life of 12 years with an equivalent annual worth of 5-24,800. The current used machine, which was bought six years ago for $48,000, has a present market value of $4,000 with the following data for the next three years: Estimated Market Value at End of Year, S Year S per Year 20,000 3,000 25,000 2,500 30,000 2,000 Select when to replace the machine, using Economic Service Life method at an interest rate of 4% per year. O a) Replace now O b) Replace in year one O ) Replace in year two O O Replace in year three
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter12: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 11P: REPLACEMENT ANALYSIS St. Johns River Shipyards is considering the replacement of an 8-year-old...
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