Question

9-34 & 9-35 Machine A was purchased three years ago for $10,000 and had an estimated MV of $1,000 at the end of its 10-year life. Annual operating costs are $1,000. The machine will perform satisfactorily for the next seven years. A salesperson for another company is offering Machine B for $50,000 with an MV of $5,000 after 10 years. Annual operating costs will be $600. Machine A could be sold now for $7,000, and MARR is 12%per year.

Use this information to answer Problems 9-34 and 9-35

9-34.Using the outsider viewpoint, what is the EUAC of continuing to use Machine A ? Choose the closest answer (9.6)

(a) $1,000 (b) $2,182 (c) $2,713 (d) $901 (e) $2,435

9-35.Using the outsider viewpoint, what is the EUAC of buying Machine B? Choose the closest answer.(9.5)

(a) $8,565 (b) $11,361 (c) $9,750 (d) $9,165 (e) $900

Answer 1

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