6.1 The Crocobeach Hotel is considering replacing an industrial oven system of their kitchen. The purchase...

  

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6.1 The Crocobeach Hotel is considering replacing an industrial oven system of their kitchen. The purchase cost of a new one will be $122,000 and will have lower maintenance costs per year compared with the older one. The current machine can be sold for $52,000 now. The salvage value and maintenance costs per year are listed below for both alternatives. Assume a 3-year useful life and the MARR is 8%. ΕΟΥ 0 1 2 3 0 1 2 3 ΕΟΥ S Value at EOY Salvage Value 0 $ $ $ $ 1 Old Machine 2 52,000 $ 46,000 $ 3 39,600 $ 34,000 $ a) Calculate the Marginal Cost of the Old machine (Defender). Which replacement analysis technique will you use and why? [10 points] EOY S Value at EOY Maintenance Costs Salvage Value $ 7,000 $ 10,200 $ 12,400 $ b) Find the EUACs of the Capital Recovery for new machine (Challenger). [10 points] P-S New Machine Loss in Market Interest Interest in Year Value Rate N 122,000 $ 110,000 $ 105,000 $ 98,000 $ (A/P,8%,N) Maintenance Costs S*i Maint. Cost 2,800 3,900 4,500 Total Marginal Cost CR EUAC c) Find the EUACs of Maintenance Cost for new machine (Challenger). [10 points] d) Find the Total EUACs of the two alternatives [8 points] e) When (Economic Life) should the old machine be replaced? Why? [2 point] 6.1 The Crocobeach Hotel is considering replacing an industrial oven system of their kitchen. The purchase cost of a new one will be $122,000 and will have lower maintenance costs per year compared with the older one. The current machine can be sold for $52,000 now. The salvage value and maintenance costs per year are listed below for both alternatives. Assume a 3-year useful life and the MARR is 8%. ΕΟΥ 0 1 2 3 0 1 2 3 ΕΟΥ S Value at EOY Salvage Value 0 $ $ $ $ 1 Old Machine 2 52,000 $ 46,000 $ 3 39,600 $ 34,000 $ a) Calculate the Marginal Cost of the Old machine (Defender). Which replacement analysis technique will you use and why? [10 points] EOY S Value at EOY Maintenance Costs Salvage Value $ 7,000 $ 10,200 $ 12,400 $ b) Find the EUACs of the Capital Recovery for new machine (Challenger). [10 points] P-S New Machine Loss in Market Interest Interest in Year Value Rate N 122,000 $ 110,000 $ 105,000 $ 98,000 $ (A/P,8%,N) Maintenance Costs S*i Maint. Cost 2,800 3,900 4,500 Total Marginal Cost CR EUAC c) Find the EUACs of Maintenance Cost for new machine (Challenger). [10 points] d) Find the Total EUACs of the two alternatives [8 points] e) When (Economic Life) should the old machine be replaced? Why? [2 point]

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A Calculate the Marginal Cost of the ... View the full answer