Question: I cant seem recreate these AW values listed in this problem. Please show work. I need the formulas. Thanks! Problem 9-22 (book/static) Question Help A

I cant seem recreate these AW values listed in this problem. Please show work. I need the formulas. Thanks!

I cant seem recreate these AW values listed in this problem. Please

Problem 9-22 (book/static) Question Help A hydraulic press was installed 10 years ago at a capital investment cost of $70,000. This press presently has a market value of $14,000. If kept, the press has an economic life of three years, operating expenses of $14,000 per year, and a market value of $10,000 at the end of year (EOY) three. The existing press is being depreciated by the straight line method using a 15-year write-off period with an estimated salvage value for depreciation purposes of $10,000 As an alternative, the currently owned press can be replaced with an improved challenger press which will cost $65,000 to install, have operating expenses of $9,000 per year, and have a final market value of $10,000 at the end of its 20-year economic life. If the replacement is made, the challenger press will be depreciated with the straight line method over a 20-year life with an estimated salvage value of $10,000 at EOY 20. It is thought that a hydraulic press will be needed indefinitely if the after-tax MARR is 10% per year and the effective income tax rate is 25%, should the defender or the challenger be recommended? Click the icon to view the interest and annuity table for discrete compounding when MARR = 10% per year The AW value for the defender is S 13113 (Round to the nearest dollar.) The AW value for the challenger is S-13526 (Round to the nearest dollar.) The defender should be kept for at least one more year Problem 9-22 (book/static) Question Help A hydraulic press was installed 10 years ago at a capital investment cost of $70,000. This press presently has a market value of $14,000. If kept, the press has an economic life of three years, operating expenses of $14,000 per year, and a market value of $10,000 at the end of year (EOY) three. The existing press is being depreciated by the straight line method using a 15-year write-off period with an estimated salvage value for depreciation purposes of $10,000 As an alternative, the currently owned press can be replaced with an improved challenger press which will cost $65,000 to install, have operating expenses of $9,000 per year, and have a final market value of $10,000 at the end of its 20-year economic life. If the replacement is made, the challenger press will be depreciated with the straight line method over a 20-year life with an estimated salvage value of $10,000 at EOY 20. It is thought that a hydraulic press will be needed indefinitely if the after-tax MARR is 10% per year and the effective income tax rate is 25%, should the defender or the challenger be recommended? Click the icon to view the interest and annuity table for discrete compounding when MARR = 10% per year The AW value for the defender is S 13113 (Round to the nearest dollar.) The AW value for the challenger is S-13526 (Round to the nearest dollar.) The defender should be kept for at least one more year

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!