Question

An asset purchased four years ago for $35,000 can be replaced by a new type of...

An asset purchased four years ago for $35,000 can be replaced by a new type of equipment. The market value of the old machine is currently $15,000 and will be $10,000, $8,000, $6,000, $2,000, and $0 at the end of each of the next five years. The annual operating costs (AOC) for each of the next five years will be $3,000, $3,200, $3,500, $4,000, and $5,000. How much longer should the defender be kept, if the MARR is 10%?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A current asset​ (defender) is being evaluated for potential replacement. It was purchased four years ago...
A current asset​ (defender) is being evaluated for potential replacement. It was purchased four years ago at a cost of ​$61,000. It has been depreciated as a MACRS​ (GDS) five-year​ property-class asset. The corresponding depreciation rates​ are: 20%,​ 32%, 19.2%,​ 11.52%, 11.52% and​ 5.76%. The present MV of the defender is ​$15,000. Its remaining useful life is estimated to be four​ years, but it will require additional repair work now​ (a one-time ​$3,800 ​expense) to provide continuing service equivalent to...
Jubail Corporation has just purchased a new CAD Machine for $35,000 to replace old machine that...
Jubail Corporation has just purchased a new CAD Machine for $35,000 to replace old machine that had a salvage value of $ 15,000. The useful life of the new machine is 10 years. The machine generates annual sales of $10,000 and has annual maintenance cost of $5,000. Calculate the Payback period using Discounted Payback method, If Jubail's MARR (minimum acceptable rate of return) is 15%: A. 8.12 Years B. 6.57 Years C. 8.57 Years D. 11.05 Years
A machine was bought 4 years ago for $20,000. SL depreciation has been used with B=$20,000,...
A machine was bought 4 years ago for $20,000. SL depreciation has been used with B=$20,000, N=5years, S=$0. A replacement is been considered. A new machine can be bought for $10,000 to replace the old one. 100% bonus depreciation will be used for the new machine with B=$10,000, N=2 years, S=$0. The new machine will be used for 2 years and then can be sold for $4,000. The new machine will save $6,000/yr in operation cost. The old machine can...
A company is thinking in replacing an existing machine. The old machine it is expected to...
A company is thinking in replacing an existing machine. The old machine it is expected to last for another four (4) years and has a market value of $3,000. Operating estimated costs are $2,000 each year. The new machine or challenger has a cost of $15,000, operating cost of $1,000 and an expected life of 10 years. The salvage value of the new machine is $5,000. Should be replaced, with an interest rate of 10%? a. Replace, the defender is...
"An existing asset that cost $18,000 two years ago has a market value of $11,000 today,...
"An existing asset that cost $18,000 two years ago has a market value of $11,000 today, an expected salvage value of $1,900 at the end of its remaining useful life of six more years, and annual operating costs of $4,000. A new asset under consideration as a replacement has an initial cost of $19,100, an expected salvage value of $3,200 at the end of its economic life of three years, and annual operating costs of $2,200. It is assumed that...
Replacement Analysis BTCF Machine A was purchased three years ago for $12,000 and had an estimated...
Replacement Analysis BTCF Machine A was purchased three years ago for $12,000 and had an estimated market value of $1,000 at the end of its 10-year life. Annual operating costs are $1,500. The machine will perform satisfactorily for the next seven years. A salesman for another company is offering machine B for $60,000 with a market value of $5,000 after 10 years. Annual operating costs will be $800. Machine A could be sold now for $8,000, and the MARR is...
Replacement Analysis BTCF Machine A was purchased three years ago for $12,000 and had an estimated...
Replacement Analysis BTCF Machine A was purchased three years ago for $12,000 and had an estimated market value of $1,000 at the end of its 10-year life. Annual operating costs are $1,500. The machine will perform satisfactorily for the next seven years. A salesman for another company is offering machine B for $60,000 with a market value of $5,000 after 10 years. Annual operating costs will be $800. Machine A could be sold now for $8,000, and the MARR is...
"You plan to operate the same type of machine for 12 years. Machine A lasts 4...
"You plan to operate the same type of machine for 12 years. Machine A lasts 4 years and Machine B lasts 6 years. Machine A costs $8,000 and Machine B costs $12,000. The salvage value of Machine A is $4,000 and the salvage value of Machine B is $2,000. Annual operation and maintenance costs are $3,000 for Machine A and $3,500 for Machine B. Both machines can be purchased in the future at the same price as today, and their...
Buckley, an individual, began business two years ago and has never sold a §1231 asset. Buckley...
Buckley, an individual, began business two years ago and has never sold a §1231 asset. Buckley has owned each of the assets since he began the business. In the current year, Buckley sold the following business assets: Asset Accumulated Original Cost Depreciation Gain/Loss Computers $ 6,000 $ 2,000 $ (3,000) Machinery 10,000 4,000 (2,000) Furniture 20,000 12,000 7,000 Building 100,000 10,000 (1,000) Assuming Buckley’s marginal ordinary income tax rate is 32 percent, answer the questions for the following alternative scenarios:...
A m/c was bought 4 years ago for $20,000. SL depreciation has been used with B=$20,000,...
A m/c was bought 4 years ago for $20,000. SL depreciation has been used with B=$20,000, N=5years, S=$0. A replacement is been considered. A new m/c can be bought for $10,000 to replace the old one. 100% bonus depreciation will be used for the new m/c with B=$10,000, N=2 years, S=$0. The new m/c will be used for 2 years and then can be sold for $4,000. The new m/c will save $6,000/yr in operation cost. The old m/c can...