Specialty concrete mixer used in construction

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Reference no: EM131905777

A specialty concrete mixer used in construction was purchased 5 years ago for $300,000; it costs $100,000 annually to operate and maintain. A new mixer has been introduced on the market that sells for $400,000 and is projected to have annual operating and maintenance costs of $50,000. If the old mixer is replaced, the company will receive $75,000 in trade-in on the old mixer. If the old mixer is retained, it will require an investment of $50,000 to overhaul it; the overhauled mixer will last another 5 years and have a negligible salvage value at that time. If the new mixer is purchased, in 5 years it will have a salvage value of $100.000. Using an insider's approach, what are (a) the PW of keeping and (b) the PW of replacing the mixer? The MARR is 9%.

Reference no: EM131905777

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