A company wants to replace the existing photocopier with the latest one. The current photocopier has following
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Question:
A company wants to replace the existing photocopier with the latest one. The current photocopier
has following estimates
Years Market Value Operating Cost
0 100,000 -
1 75,000 28,000
2 60,000 31,000
3 50,000 34,000
4 40,000 34,000
5 25,000 36,000
6 15,000 45,000
7 0 49,000
The new photocopier will have the 150,000$ initial cost. The maintenance and operating cost is 15000$ per year while the salvage value will be 35000$ after the useful life of 5 years. Evaluate both alternatives considering interest rate of 10% per year and decide whether the old photocopier will be replaced or retained?
Related Book For
Applied Regression Analysis and Other Multivariable Methods
ISBN: 978-1285051086
5th edition
Authors: David G. Kleinbaum, Lawrence L. Kupper, Azhar Nizam, Eli S. Rosenberg
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