A piece of equipment that was purchased 2 years ago by Toshiba Imaging for $50,000 was expected to have a useful life of 5 years with a $5000 salvage value. Its performance was less than expected, and it was upgraded for $20,000 one year ago. Increased demand now requires that the equipment be upgraded again for another $16,500 so that it can be used for 3 more years. If upgraded, its M&O costs will be $22,500 and it will have a $12,000 salvage after 3 years. Alternatively, it can be replaced with new equipment priced at $65,000 with M&O costs of $14,000 per year and a salvage value of $23,000 after 6 years. If replaced now, the existing equipment will be sold for $7000. Determine the values of P, S, M&O, and n for the defender in a replacement study. The value of Pis $-| The value of Sis $| The value of M&O is $-| The value of nis[ years. per year.

A piece of equipment that was purchased 2 years ago by Toshiba Imaging for $50,000 was expected to have a useful life of 5 years with a $5000 salvage value. Its performance was less than expected, and it was upgraded for $20,000 one year ago. Increased demand now requires that the equipment be upgraded again for another $16,500 so that it can be used for 3 more years. If upgraded, its M&O costs will be $22,500 and it will have a $12,000 salvage after 3 years. Alternatively, it can be replaced with new equipment priced at $65,000 with M&O costs of $14,000 per year and a salvage value of $23,000 after 6 years. If replaced now, the existing equipment will be sold for $7000. Determine the values of P, S, M&O, and n for the defender in a replacement study. The value of Pis $-| The value of Sis $| The value of M&O is $-| The value of nis[ years. per year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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