The present worth of the after-tax cash flows of an existing machine (defender) with three-year remaining...

 

Transcribed Image Text:

The present worth of the after-tax cash flows of an existing machine (defender) with three-year remaining useful life and a replacement alternative (challenger) with a five-year useful life are given below. Assuming an after-tax MARR of 11%, (a) determine the minimum equivalent uniform annual cost and the economic life of each asset and (b) explain when the existing machine be replaced with the new machine. Year 12345 Defender -$13,080 -26,400 -42,055 Challenger -$17,780 -33,575 -47,250 -63,450 -75,960 The present worth of the after-tax cash flows of an existing machine (defender) with three-year remaining useful life and a replacement alternative (challenger) with a five-year useful life are given below. Assuming an after-tax MARR of 11%, (a) determine the minimum equivalent uniform annual cost and the economic life of each asset and (b) explain when the existing machine be replaced with the new machine. Year 12345 Defender -$13,080 -26,400 -42,055 Challenger -$17,780 -33,575 -47,250 -63,450 -75,960

Answer rating: 100% (QA)

To determine the minimum equivalent uniform annual cost and the economic life of each asset we need to calculate the present worth of the aftertax cas... View the full answer