The replacement of a planning machine is being considered by the Reardom Furnitu

Question

The replacement of a planning machine is being considered by the Reardom Furniture Company. (There is an indefinite future need for this type of machine.) The best chailenger will cost $30,000 for installation and will have an estimated economic life of 11 years and a $2,000 MV at that time. It is estimated that annual expenses will average $13,000 per year. The defender has a present BV of $5,500 and a present MV of $4000. Data for the defender for the next three years are given below. Using a before-tax interest rate of 12% per year, make a comparison to determine whether it is economical to make the replacement now. Year MV at End of BV at End of Expenses during Year $3,000 2,250 1,500 Year $4,125 2,750 ,375 the Year $22,000 28,000 34,000 Click the icon to view the interest and annuity table for disrete compounding when i. 12% per year. Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar) Year EUAC Year FUAC 1$23,480 2 $26,136 3$28.760 The EUAC for the challenger over its useful life is $ 17,955. (Round to the nearest dollar.) The replacement should be made immediately

Explanation / Answer

the values were multipied with discounting factor

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