How much should the eac of a new joint former be over

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Reference no: EM131962936

A joint former cost $ 60 000 to purchase and $ 100 000 to install seven years ago. The market value now is $ 33 000, and this will decline by 12 percent of current value each year for the next three years.

Operating and maintenance costs are estimated to be $ 3 400 this year, and are expected to increase by $ 500 per year.

(a) How much should the EAC of a new joint former be over its economic life to justify replacing the old one sometime in the next three years? The MARR is 10 percent.

(b) The EAC for a new joint former turns out to be $ 10 300 for a 10- year life. Should the old joint former be replaced within the next three years? If so, when?

(c) Is it necessary to consider replacing the old joint former more than three years from now, given that a new one has an EAC of $ 10 300?

Reference no: EM131962936

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