Question: Solve using replacement analysis. The initial cost of a certain piece of equipment in operation at Company XT is $100,000. Its O&M expenses are $30,000
Solve using replacement analysis.
The initial cost of a certain piece of equipment in operation at Company XT is $100,000. Its O&M expenses are $30,000 for the first year, and these expenses are expected to increase thereafter at a rate of $10,000 per year. . A supplier presents the XT company with an offer to replace the equipment with a new one whose initial cost is $172,000, and whose operation and maintenance expenses are estimated at $25,000 per year, guaranteeing a useful life of the product for 10 years. According to a replacement analysis considering an evaluation at a time horizon of 5 years (remaining useful life of the defending equipment) and a MARR of 15%, would it be convenient to replace the asset in question?
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