From Replacement Technique 1 Section:

An existing drill press has a salvage value now of $5000, which will fall to $4000 by the end of the year. The cost of lower productivity using this drill press is $3000 this year. A new-fangled drill press, being considered as a replacement, has the following salvage values and loss of productivity:

Year	Salvage	Productivity Loss
0	$12,000
1	$9000	$0
2	$7000	$1000
3	$5000	$2000
4	$3000	$3000

Assume an interest rate of 15%. Calculate the EUAC for each year of the new-fangled drill press. Calculate the marginal cost of the existing drill press. In what year does the new-fangled drill press EUAC fall below the marginal cost of the existing drill press and what is the amount of the new-fangled drill press EUAC of that year?

Answers: Year new-fangled EUAC is less than Existings marginal cost: ____, EUAC in that year:___________

Question: Find Present Worth (PW), and EUAC(Equivalent Uniform Annual Cost)

Reasoning/Work: Use :

Defender Marginal Cost = Loss in Salvage Value + Lost Interest + Lost Productivity

Defender Marginal Cost = (5,000 4,000) + 5000*0.15 + 3,000 = $4,750

And complete the Table below:

Year	Salvage	Loss in SV	Interest Year n	Productivity Loss	Marginal costs	PW of cost	EUAC
0	12000
1	9000	3000	1800	0	4800
2	7000	2000	1350	1000	4350
3	5000	2000	1050	2000	5050
4	3000	2000	750	3000	5750