Question: An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new

An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been developed for both the defender and the challenger. The company's before-tax MARR is 15% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for an indefinite period of time.


Current MV	$37,000	Purchase price	$55,000
Required upgrade	$2,000	Installation cost	$6,000
Annual expenses	$1,600	Annual expenses	$1,100
Remaining useful life	5 years	Useful life	9 years
MV at end of useful life	$1,600	MV at end of useful life	$6000

The AW value of the defender is

The AW value of the challenger is

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