$(20$ Points$)2.$ Five years ago, a conveyor system was installed in a manufacturing plant at a cost of $\backslash (\backslash$$ $35,000\backslash ).$ The company spent $\backslash (\backslash$$ $8,000\backslash )$ last month repairing the system to keep it operational and your supervisor wants you to access when the system should be replaced. I was estimated

CMGT $547$ Managerial Engineering Economics

Final Examination

that the system, which still in operating condition, would have a useful life of eight years, with a salvage value of $\backslash (\backslash$$ $3,000\backslash ).$ If the firm continues to operate the system, the system's estimated market values and operating costs for the next three years are as follows:

A new system can be installed for $\backslash (\backslash$$ $43,500\backslash ).$ This system would have an estimated economic life of $10$ years, with a salvage value of $\backslash (\backslash$$ $3,500\backslash ).$ The operating costs for the new system are expected to be $\backslash (\backslash$$ $1,500\backslash )$ per year throughout its service life. The firm's MARR is $\backslash (15\backslash \%\backslash ).$ Ignore any income tax effects for this problem.

a$.$ What is the remaining economic service life of the old machine?

b$.$ When should the defender be replaced?

c$.$ How would the analysis be impacted if the repair cost was half?