Question
In: Finance
Toshiba Inc. is considering replacing a machine. These are the data for both the used and...
Toshiba Inc. is considering replacing a machine. These are the data for both the used and new machine.
Used machine: the machine was purchased for $16,050 two years ago, the current salvage value is $10884 and is expected to have a scrap value of $7411 whenever it is retired. This used machine still has 4 years left of service. From now on, the operating and Maintenance costs are $2293 for the first year and expected to increase by $1015 thereafter.
New Machine: machine costs $13199 and is expected to have a scrap value of $6611 whenever it is retired. Operating and Maintenance costs are $1775 for the first year and expected to increase by $1749 thereafter. The service life of this machine is 4 years.
If the MARR is 12%, determine the minimum equivalent uniform annual cost associated with the optimal economic life of the machine that offers the lowest EUAC.
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Expert Solution
The following are the data inputs in spreadsheet:
The following are the obtained results in spreadsheet:
jeff jeffy answered 2 years agoRelated Solutions
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Replacement
Machine
Original cost
$55,000
$45,000
Remaining useful life in years
5
5
Current age in years
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0
Book value
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Current disposal value in cash
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$0
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