Calculate the value of the difference in annual costs

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Reference no: EM131603114

Machine A was purchased three years ago for $30,000 and had an estimated MV of $3,000 at the end of its 10-year life. Annual operating costs are $2, 800. The machine will perform satisfactorily for the next seven years. A salesperson for another company is offering Machine B for $45,000 with an MV of $6,000 after 10 years. Annual operating costs will be $2,000. Machine A could be sold now for $24,000, and MARR is 15% per year. Compare the before tax equivalent uniform annual cost, EUAC, of the defender keeping Machine A to the challenger (buying Machine B). To answer this problem, calculate the value of the difference in annual costs: EUAC(challenger) - EUAC(defender) - EUAC(Machine B) - EUAC(Machine A). (Enter your answer as a number without the dollar $ sign.)

Reference no: EM131603114

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