Question: Razorback Corp. is evaluating whether it should keep its automatic guided vehicle or sell it immediately and purchase a new one. The current vehicle can
Razorback Corp. is evaluating whether it should keep its automatic guided vehicle or sell it immediately and purchase a new one. The current vehicle can be sold for $28,000 now; however, with an overhaul of $8250, the current vehicle can last another 5 years. Other relevant costs are shown below. Use a before-tax MARR of 5% per year and determine whether the current vehicle should be replaced. Defender Challenger 34,250, 5 years ago 38,250 Capital investment, $ 5500 7800 Annual operating expenses, $ 10 12 Useful life, years 2500 5500 Estimated salvage value at the end of useful life
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