Suppose we are thinking about replacing an old computer with a new one. The old one cost
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Question:
Suppose we are thinking about replacing an old computer with a
new one. The old one cost us $; the new one will cost,
$ The new machine will be depreciated straightline to
zero over its fiveyear life. It will probably be worth about
$ after five years. The old computer is being depreciated at
a rate of $ per year. It will be completely written off in
three years. If we dont replace it now, we will have to replace it
in two years. We can sell it now for $; in two years, it
will probably be worth $ The new machine will save us
$ per year in operating costs. The tax rate is percent,
and the discount rate is percent. a Calculate the EAC for the
the old computer and the new computer. A negative answer should be
indicated by a minus sign. Do not round intermediate calculations
and round your answers to decimal places, eg a What
is the NPV of the decision to replace the computer now? A negative
answer should be indicated by a minus sign. Do not round
intermediate calculations and round your answer to decimal
places, eg
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