Question: An engineer calculated the AW values shown for retaining a presently owned machine additional years. A challenger has an ESL of 7 years with Aw

 An engineer calculated the AW values shown for retaining a presently

An engineer calculated the AW values shown for retaining a presently owned machine additional years. A challenger has an ESL of 7 years with Aw = $-86,000 per year. Assuming all future costs remain the same, when should the company purchase the Challenger? The MARR is 12% per year. Assume used machines like the one presently owned will always be available Years Retained AW of Defender 1 year 2 years 3 years 4 years 5 years $/year -145,000 96,000 63,000 39,000 -49,000 a) between year 2 and 3 because the Challenger's ESL becomes less than the Defender's AW for year 3. b) after year 4 because the Defender should be replaced after it's ESL. c) after year 5 because the service life of the Defender is 5 years and it is best to use it as long as possible. . d) never because the Defender's ESL is less than the ESL of the Challenger. An engineer calculated the AW values shown for retaining a presently owned machine additional years. A challenger has an ESL of 7 years with Aw = $-86,000 per year. Assuming all future costs remain the same, when should the company purchase the Challenger? The MARR is 12% per year. Assume used machines like the one presently owned will always be available Years Retained AW of Defender 1 year 2 years 3 years 4 years 5 years $/year -145,000 96,000 63,000 39,000 -49,000 a) between year 2 and 3 because the Challenger's ESL becomes less than the Defender's AW for year 3. b) after year 4 because the Defender should be replaced after it's ESL. c) after year 5 because the service life of the Defender is 5 years and it is best to use it as long as possible. . d) never because the Defender's ESL is less than the ESL of the Challenger

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