Question

A vibration isolation platforms manufacturing company  is trying to decide whether it should replace the current assembly system (D), which is rather labor intensive, now or 1 year from now with a system that is more automated (C). Some components of the current system (D) can be sold immediately for $9000, but they will be worthless hereafter. The operating cost of existing system is $192,000 per year. System C will cost $320,000 with a $50,000 salvage value after 4 years. Its operating cost will be $68,000 per year. If you are told to do a replacement analysis using an interest rate of 12% per year, what is the AW of the recommended system

Answer 1