What is the economic life of the asset

Reference no: EM132172427

Question - A 2-year old asset is being considered for replacement. Its current market value is $13,000. The estimated market values during the next 3 years are given in the following table (the asset has a useful life of 5 years, but a similar asset is needed indefinitely). The effective MARR is 10% per year.

EOY	Market Value	Annual Expenses
1	$9,000	$2,500
2	$8,000	$2,700
3	$6,000	$3,000

a) What is the economic life of the asset?

b) What should be done if the AW of the best alternative is $6,200?

Reference no: EM132172427

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