The owner of a bowling alley, an engineer by training, purchases a MARGARITA MACHINE for $7,500....
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The owner of a bowling alley, an engineer by training, purchases a MARGARITA MACHINE for $7,500. For depreciation purposes, the machine has a 5-year recovery period. After two years of usage, it appears to be less attractive than the MASTER BLENDER, capable of a wider variety of frozen concoctions. The details of the current asset for the remainder of its life are shown below with those of the possible replacement challenger.. The defender market value will be $1,000 at the end of the third additional year. the asset be retained? Interest is 10% per year. Income generated by either machine is assumed to be identical. NEXT THREE YEARS FOR MARGARITA MACHINE VALUE AT ADDITIONAL YEARS 1 2 3 1. 2. 3. . . . BEGINNING OF YEAR . $4,500 3,000 1,500 ANNUAL OPERATING COST $3,000 3,500 4,000 How many more years should additional year analysis? How many more years should Ignore inflation and taxes. MULTI-CONCOCTION MASTER BLENDER $10,000 3,000/ 1 YEARS FIRST COST OPERATING COST LIFE SALVAGE VALUE 1,000 Some concepts that may be useful in these analyses include: One Additional Year Analysis: Used when the defender's performance cannot be projected beyond the very next year. The challenger's performance, however, must be predictable. Trade-in value: Expected salvage value asset be retained using a One- What would be the true ESL of the defender using the minimun-cont- life technique? Assuming a planning horizon of three years (making the defender and challenger equal-life alternatives) demonstrate the opportunity cost method and b.) the cash flow method of replacement analysis. Market value: Actual salvage value Sunk cost: Trade-in value- Market value . Consultants Viewpoint: The idea that to keep an asset at the beginning of any year is to "repurchase" it at the current Market value. Cash-flow Approach: If defender and challenger lives are equal then Set Defender first cost 01 Set Challenger first cost challenger price defender trade in a F TY The owner of a bowling alley, an engineer by training, purchases a MARGARITA MACHINE for $7,500. For depreciation purposes, the machine has a 5-year recovery period. After two years of usage, it appears to be less attractive than the MASTER BLENDER, capable of a wider variety of frozen concoctions. The details of the current asset for the remainder of its life are shown below with those of the possible replacement challenger.. The defender market value will be $1,000 at the end of the third additional year. the asset be retained? Interest is 10% per year. Income generated by either machine is assumed to be identical. NEXT THREE YEARS FOR MARGARITA MACHINE VALUE AT ADDITIONAL YEARS 1 2 3 1. 2. 3. . . . BEGINNING OF YEAR . $4,500 3,000 1,500 ANNUAL OPERATING COST $3,000 3,500 4,000 How many more years should additional year analysis? How many more years should Ignore inflation and taxes. MULTI-CONCOCTION MASTER BLENDER $10,000 3,000/ 1 YEARS FIRST COST OPERATING COST LIFE SALVAGE VALUE 1,000 Some concepts that may be useful in these analyses include: One Additional Year Analysis: Used when the defender's performance cannot be projected beyond the very next year. The challenger's performance, however, must be predictable. Trade-in value: Expected salvage value asset be retained using a One- What would be the true ESL of the defender using the minimun-cont- life technique? Assuming a planning horizon of three years (making the defender and challenger equal-life alternatives) demonstrate the opportunity cost method and b.) the cash flow method of replacement analysis. Market value: Actual salvage value Sunk cost: Trade-in value- Market value . Consultants Viewpoint: The idea that to keep an asset at the beginning of any year is to "repurchase" it at the current Market value. Cash-flow Approach: If defender and challenger lives are equal then Set Defender first cost 01 Set Challenger first cost challenger price defender trade in a F TY The owner of a bowling alley, an engineer by training, purchases a MARGARITA MACHINE for $7,500. For depreciation purposes, the machine has a 5-year recovery period. After two years of usage, it appears to be less attractive than the MASTER BLENDER, capable of a wider variety of frozen concoctions. The details of the current asset for the remainder of its life are shown below with those of the possible replacement challenger.. The defender market value will be $1,000 at the end of the third additional year. the asset be retained? Interest is 10% per year. Income generated by either machine is assumed to be identical. NEXT THREE YEARS FOR MARGARITA MACHINE VALUE AT ADDITIONAL YEARS 1 2 3 1. 2. 3. . . . BEGINNING OF YEAR . $4,500 3,000 1,500 ANNUAL OPERATING COST $3,000 3,500 4,000 How many more years should additional year analysis? How many more years should Ignore inflation and taxes. MULTI-CONCOCTION MASTER BLENDER $10,000 3,000/ 1 YEARS FIRST COST OPERATING COST LIFE SALVAGE VALUE 1,000 Some concepts that may be useful in these analyses include: One Additional Year Analysis: Used when the defender's performance cannot be projected beyond the very next year. The challenger's performance, however, must be predictable. Trade-in value: Expected salvage value asset be retained using a One- What would be the true ESL of the defender using the minimun-cont- life technique? Assuming a planning horizon of three years (making the defender and challenger equal-life alternatives) demonstrate the opportunity cost method and b.) the cash flow method of replacement analysis. Market value: Actual salvage value Sunk cost: Trade-in value- Market value . Consultants Viewpoint: The idea that to keep an asset at the beginning of any year is to "repurchase" it at the current Market value. Cash-flow Approach: If defender and challenger lives are equal then Set Defender first cost 01 Set Challenger first cost challenger price defender trade in a F TY The owner of a bowling alley, an engineer by training, purchases a MARGARITA MACHINE for $7,500. For depreciation purposes, the machine has a 5-year recovery period. After two years of usage, it appears to be less attractive than the MASTER BLENDER, capable of a wider variety of frozen concoctions. The details of the current asset for the remainder of its life are shown below with those of the possible replacement challenger.. The defender market value will be $1,000 at the end of the third additional year. the asset be retained? Interest is 10% per year. Income generated by either machine is assumed to be identical. NEXT THREE YEARS FOR MARGARITA MACHINE VALUE AT ADDITIONAL YEARS 1 2 3 1. 2. 3. . . . BEGINNING OF YEAR . $4,500 3,000 1,500 ANNUAL OPERATING COST $3,000 3,500 4,000 How many more years should additional year analysis? How many more years should Ignore inflation and taxes. MULTI-CONCOCTION MASTER BLENDER $10,000 3,000/ 1 YEARS FIRST COST OPERATING COST LIFE SALVAGE VALUE 1,000 Some concepts that may be useful in these analyses include: One Additional Year Analysis: Used when the defender's performance cannot be projected beyond the very next year. The challenger's performance, however, must be predictable. Trade-in value: Expected salvage value asset be retained using a One- What would be the true ESL of the defender using the minimun-cont- life technique? Assuming a planning horizon of three years (making the defender and challenger equal-life alternatives) demonstrate the opportunity cost method and b.) the cash flow method of replacement analysis. Market value: Actual salvage value Sunk cost: Trade-in value- Market value . Consultants Viewpoint: The idea that to keep an asset at the beginning of any year is to "repurchase" it at the current Market value. Cash-flow Approach: If defender and challenger lives are equal then Set Defender first cost 01 Set Challenger first cost challenger price defender trade in a F TY
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Related Book For
Operations management processes and supply chain
ISBN: 978-0136065760
9th edition
Authors: Lee J Krajewski, Larry P Ritzman, Manoj K Malhotra
Posted Date:
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