A firm is planning to replace a machine. It was put into service 4 years ago. It costed $26000. The current salvage valu

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A Firm Is Planning To Replace A Machine It Was Put Into Service 4 Years Ago It Costed 26000 The Current Salvage Valu 1 (32.81 KiB) Viewed 68 times

A firm is planning to replace a machine. It was put into service 4 years ago. It costed $26000. The current salvage value is $13000, and it will reduce to $10,000, $8125, $7000, and $6250 yearly. The operating cost is $3000 and increase by $1000 yearly. The interest rate is 10%. And, an alternative equipment will have $7100 uniform annual cost. Determine when to replace this machine is better? Sketch Solution (just compare values against $7100): Year1=-13000(A/P,10,1)+10000(A/F,10,1)-30 $7300 Year2=-13000(A/P,10,2)+8125(A/F,10,2)-300 1000(A/G.10.2) Year3=-13000(A/P.1.3)+7000(A/F.10.3)-3000- 1000(A/G.10,3) Year4=-13000(A/P.1, 4)+6125(A/F.10,4)-3000- 1000(A/G,10,4) after 1 st year after 2nd year after 3rd year after 4th year