Show the solution to this answer without tables but with actual written formulas.
Show the solution to this answer without tables but with actual written formulas.
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.2SA
Related questions
Question
Chatham Automotive purchased new electric forklifts to move steel automobile parts two years ago. They cost
$65,000
each, including the charging stand. In practice, it was found that they did not hold a charge as long as claimed by the manufacturer, so operating costs are very high. As a result, their current salvage value is about
$9,000.
Chatham is considering replacing them with propane models. New propane forklifts cost
depreciation rate of
$58,000
each. After one year, they have a salvage value of
$40,000,
and thereafter decline in value at a declining-balance 20
percent, as does the electric model from this time on. The MARR is
8
percent. Operating costs for the electric model will be
$19,000
this year, rising by
12
percent per year. Operating costs for the propane model will initially be
$11,000
over the first year, rising by
12
percent per year. Should Chatham Automotive replace the forklifts now?Find EAC for both propane and elctric forklifts.
P.S. Show the solution to this answer without tables but with actual written formulas. Thanks!
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