You are considering replacing an existing machine that you purchased five years ago when it cost...

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You are considering replacing an existing machine that you purchased five years ago when it cost $130,000. If you keep this machine it will last for nine more years. A newer, more efficient machine that will also last for nine years could be purchased today for $260,000. If you purchased the new machine, you would sell the existing machine for only $40,000. The existing machine would cost you $90,000 per year to operate while the new machine would only cost you $40,000 per year to operate. At the end of nine years, the old machine would be worth only $10,000, while you could sell the more efficient machine for $40,000 at that time. No matter which machine you use (and you must use one of them), the revenues will be $600,000 per year. Ignore income taxes!! What is the Equivalent Uniform Annual Cost (EUAC) of operating the existing machine for the next nine years at 14% per annum? b. What is the Equivalent Uniform Annual Cost (EUAC) of operating the newer, more efficient, machine for the next nine years at 14% per annum? c. What is the present value (at 14%) of the difference between the two EUAC's that you just computed in parts a and b? You are considering replacing an existing machine that you purchased five years ago when it cost $130,000. If you keep this machine it will last for nine more years. A newer, more efficient machine that will also last for nine years could be purchased today for $260,000. If you purchased the new machine, you would sell the existing machine for only $40,000. The existing machine would cost you $90,000 per year to operate while the new machine would only cost you $40,000 per year to operate. At the end of nine years, the old machine would be worth only $10,000, while you could sell the more efficient machine for $40,000 at that time. No matter which machine you use (and you must use one of them), the revenues will be $600,000 per year. Ignore income taxes!! What is the Equivalent Uniform Annual Cost (EUAC) of operating the existing machine for the next nine years at 14% per annum? b. What is the Equivalent Uniform Annual Cost (EUAC) of operating the newer, more efficient, machine for the next nine years at 14% per annum? c. What is the present value (at 14%) of the difference between the two EUAC's that you just computed in parts a and b?

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a EUAC of existing m... View the full answer