A piece of equipment cost $100,000 to purchase and $60,000 to install seven years ago. The...

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A piece of equipment cost $100,000 to purchase and $60,000 to install seven years ago. The market value now is $33,000, and this will decline by 12 percent of the current value each year for the next three years. Operating and maintenance costs are estimated to be $3,400 this year and are expected to increase by $500 per year. a. How much should the EAC of a new piece of equipment be over its economic life to justify replacing the old one sometime within the next three years? The MARR is 10 percent. b. The EAC for the new piece of equipment turns out to be $10,300 for a 10-year life. Should the old piece of equipment be replaced within the next three years? If so, when? c. Is it necessary to consider replacing the old piece of equipment more than three years from now, given that the new one has an EAC of $10,300? A piece of equipment cost $100,000 to purchase and $60,000 to install seven years ago. The market value now is $33,000, and this will decline by 12 percent of the current value each year for the next three years. Operating and maintenance costs are estimated to be $3,400 this year and are expected to increase by $500 per year. a. How much should the EAC of a new piece of equipment be over its economic life to justify replacing the old one sometime within the next three years? The MARR is 10 percent. b. The EAC for the new piece of equipment turns out to be $10,300 for a 10-year life. Should the old piece of equipment be replaced within the next three years? If so, when? c. Is it necessary to consider replacing the old piece of equipment more than three years from now, given that the new one has an EAC of $10,300?

Answer rating: 100% (QA)

a EACcapital 2 additional years P SAP 10 2 Si 33 000 25 55520057619 25 5552001 cong68... View the full answer