Use study period of 8 years and the pw method

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Reference no: EM13238854

Lumberjack Power, operator of a nuclear plant, is planning to replace its current equipment with some that is more environmental friendly. The old equipment has annual operating expenses of $6,750 and can be kept for 8 more years. The equipment will have a salvage value of $4,000, if sold 8 year from now, and has a current market value of $24,000, if it is sold now. The new equipment has an initial cost of $62,000 and has estimated annual operating expenses of $6,250 each year. The estimated market value of the new equipment is $19,000 after 8 years of operating. If company's MARR is 15% per year, should the equipment be replaced? Use study period of 8 years and the PW method.

Reference no: EM13238854

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