An asset purchased 6 years ago for 80,000 SR, can be sold now for 30,000 SR...

 

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An asset purchased 6 years ago for 80,000 SR, can be sold now for 30,000 SR or kept for a maximum of 3 more years, in which case its operating cost will be 2,000 SR each year, with a salvage value of 15,000 SR after one year, 10,000 SR after two years, or 5,000 SR after three years. A suitable challenger will have an annual worth of 18,000 SR per year and can be used for a maximum of 3 years. At an interest rate of 10% per year and over a study period of exactly 5 years, determine when the defender should be replaced using the Annual worth analysis. An asset purchased 6 years ago for 80,000 SR, can be sold now for 30,000 SR or kept for a maximum of 3 more years, in which case its operating cost will be 2,000 SR each year, with a salvage value of 15,000 SR after one year, 10,000 SR after two years, or 5,000 SR after three years. A suitable challenger will have an annual worth of 18,000 SR per year and can be used for a maximum of 3 years. At an interest rate of 10% per year and over a study period of exactly 5 years, determine when the defender should be replaced using the Annual worth analysis.

Answer rating: 100% (QA)

Cost of Purchase 6 Years ago 80000 SR Annual worth per ye... View the full answer