Question: With the estimates shown below, Sarah needs to determine the trade in (replacement) value of machine X that will render its AW equal to that

With the estimates shown below, Sarah needs to determine the trade in (replacement) value of machine X that will render its AW equal to that of machine Y at an interest rate of 8% per year. Determine the RV

(a) By hand solution,

(b) Using a spreadsheet.

Machine X Machine Y Market value, $ 80,000 Annual cost, $ per year -40,000 year 1, increasing by 2000 -60,000 per year t

Machine X Machine Y Market value, $ 80,000 Annual cost, $ per year -40,000 year 1, increasing by 2000 -60,000 per year thereafter Salvage value, $ 15,000 20,000 Life, years 3

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