Alfa bakery is considering replacing its existing automated oven. The current market value of the oven is $12,000. The value of the oven depreciates by 25% per year. The generator produces 36 cakes per day and requires $3,500 in maintenance costs per year as of today. The maintenance costs are expected to increase by $800 per year as the oven gets older. If the MARR is 10%, should Alfa bakery replace the oven?

Answer rating: 100% (QA)

To determine whether Alfa bakery should replace its existing oven we can compare the present worth of the costs associated with the current oven and t... View the full answer