Four years ago, an industrial batch oven was purchased for $24,000. If sold now, the machine will bring $2500. If sold at the end of the year, it will bring $1500. Salvage value will decline by 20% each additional year. Annual operating costs for subsequent years are $3800 next year and then increase at 8% per year. A new machine will cost $49,000 with a 12-year economic life and have a $3000 salvage value. The operating cost will be $3000 as of the end of each year, with the $6000-per-year savings due to better quality control. If the firm's MARR is 10%, should the machine be purchased now? What is the defender's economic life? year(s) What is the AEC of the defender at its economic life? $ What is the AEC of the challenger at its economic life? $ Please choose your conclusion below:

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Four years ago, an industrial batch oven was purchased for $24,000. If sold
now, the machine will bring $2500. If sold at the end of the year, it will bring
$1500. Salvage value will decline by 20% each additional year. Annual
operating costs for subsequent years are $3800 next year and then increase at
8% per year. A new machine will cost $49,000 with a 12-year economic life and
have a $3000 salvage value. The operating cost will be $3000 as of the end of
each year, with the $6000-per-year savings due to better quality control. If the
firm's MARR is 10%, should the machine be purchased now?
What is the defender's economic life?
year(s)
What is the AEC of the defender at its economic life? $
What is the AEC of the challenger at its economic life? $
Please choose your conclusion below:
Transcribed Image Text:Four years ago, an industrial batch oven was purchased for $24,000. If sold now, the machine will bring $2500. If sold at the end of the year, it will bring $1500. Salvage value will decline by 20% each additional year. Annual operating costs for subsequent years are $3800 next year and then increase at 8% per year. A new machine will cost $49,000 with a 12-year economic life and have a $3000 salvage value. The operating cost will be $3000 as of the end of each year, with the $6000-per-year savings due to better quality control. If the firm's MARR is 10%, should the machine be purchased now? What is the defender's economic life? year(s) What is the AEC of the defender at its economic life? $ What is the AEC of the challenger at its economic life? $ Please choose your conclusion below:
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