Facilitating access to and from busy maintenance depot

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Reference no: EM132011907

A railyard needs a modern transport system for facilitating access to and from a busy maintenance depot. A second-hand system will cost $75,000; a new system will cost $150,000. Both systems have a useful life of five years. The market value of the used system is expected to be $20,000 at the end of the useful lifetime, whereas the market value of the new system is anticipated to be $50,000 in five years. Current maintenance activity will require the used system to be operated 8 hours per day for 20 days per month. The new system with improved technology can decrease labor hours by 20%, compared to the used system. If labor costs $35 per hour and the MARR is 1% per month, calculate the difference between the annual worth of the used system and the new system (e.g., AW(Used System) – AW (New System)). If you believe the new system has a greater worth than the used system, this would be a negative number; if you believe the used system has greater worth, this would be a positive number. Report your answer to the nearest dollar.

Reference no: EM132011907

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