You own a machine that has fulfilled its economic life and its market value is 0. It has a fixed operating cost of $43,000 and a changing (variable) maintenance cost. You conduct a replacement analysis with a challenger that has a buy price of $80,000 and the following market value and cost information: Year 1 2 3 4 O&M expense $30,000 $30,000 $35,000 $40,000 $45,000 Market value 60,000 50,000 40,000 25,000 12,500 With a MARR 15% your replacement analysis has shown that you should replace the defender immediately. What is the minimum value of the changing (variable) maintenance cost?

You own a machine that has fulfilled its economic life and its market value is 0. It has a fixed operating cost of $43,000 and a changing (variable) maintenance cost. You conduct a replacement analysis with a challenger that has a buy price of $80,000 and the following market value and cost information: Year 1 2 3 4 O&M expense $30,000 $30,000 $35,000 $40,000 $45,000 Market value 60,000 50,000 40,000 25,000 12,500 With a MARR 15% your replacement analysis has shown that you should replace the defender immediately. What is the minimum value of the changing (variable) maintenance cost?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.3: Single-stage Decision Problems

Problem 5P

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