Should vou replace vour existing equipment now

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Reference no: EM131356345

You own several copiers that are currently valued at RIO 000 all together. .Annual operating and maintenance costs for all copiers are estimated at R9000 next year, increasing by 10% each year thereafter. Salvage values decrease at a rate of 20% per year.
You are considering replacing your existing copiers with new ones that have a suggested retail price of R25 000 . Operating and maintenanc e costs for the new equipment will be R6000 over the first year, increasing by 10% each year thereafter. The salvage value of the new equipment is well approximated bv a 20% drop from the suggested retail price per year. Furthermore , vou can ge t a trade - in allowance of R12 000 for your equipment if you purchase the new equipment at its suggested retail price. Your MARR is 8%. Should vou replace vour existing equipment now?

Reference no: EM131356345

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