4. ATCF Replacement Analysis. Machine A was purchased three years ago for $16,00

Question

4. ATCF Replacement Analysis. Machine A was purchased three years ago for $16,000 and had an estimated market value of $4,000 at the end of its 8-year life. Annual operating and maintenance cost for Machine-A are $2,100. Machine-A will perform satisfactorily for the next (5) five years. A salesman for another company is offering Machine B for $14,000 with a market value of $5,000 at the end of its 8 years life. Annual operating and maintenance costs will be $1,500. Machine A could be sold now for $8,000 Use MARR is 8% per year. Use SL-Classic depreciation for Machine-A (defender). And Machine- B(Challenger) use MACRS-ADS-5 years recovery period. Use 40% income tax rate for both machines. Remember machines has different life, use AWATCF analysis a. Should Machine A be replaced with Machine B?

Explanation / Answer

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Dumping will lead to low prices in the US market. Hence, consumers will increase quantity demanded

and producers will decrease quantity supplied. This will lead to increase in shrimp imports.
If the government
If US imposes a tariff on shrimp, the price of shrimp in domestic market will increase. Hence, consumers will consume less shrimp and pay higher price. hence, the consumers will lose.
If the government attempts to control shrimp at higher price level, there would be surplus of shrimp.

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