- Exe Company Is Planning To Acquire A New Diesel Generating Set To Replace Its Resent Unit Which They Run During Brownout 1 (48.48 KiB) Viewed 32 times
EXE company is planning to acquire a new Diesel generating set to replace its resent unit which they run during brownouts. The new set would cost 150,000 with a five (5) year-life, and no estimated salvage value. Operating cost would be 100,000 a year. The resent generating set has a book value of 90,000 and a remaining life of 5 years. Its disposal value now is 10,000 after 5 years. Operating cost would be 157,000 a year. Money is worth 15%. Which is profitable, to buy the new generator set or retain the resent set? Use Rate of Return method or annual cost method. (15 points)