An existing robot is used in a commercial material laboratory to handle ceramic

Question

An existing robot is used in a commercial material laboratory to handle ceramic samples in the high-temperature environment that is part of several test procedures Due to changing customer needs, the robot will not meet future service requirements unless it is upgraded at a cost of $2,000. Because of this situation, a new advanced technology robot has been selected for potential replacement of the existing robot. The accompanying estimates have been developed from information provided by some current users of the new robot and data obtained from the manufacturer. The firm's before-tax MARR is 18% should the existing robot be replaced? Assume that a robot will be needed for an indefinite period. EB Click the icon to view the data for the Defender and the Challenger per year. Based on this information Click the icon to view the interest and annuity table for discrete compounding when ,-8% per year Click the icon to view the interest and annuity table for discrete compounding when MARR 18% per year The AW value for Defender is S (Round to the nearest dollar.) More Info Defender Current MV Upgrade cost (year 0) Annual expenses $37,900 $2,000 $1,200 in year one, and increasing at the rate of 8% per year thereafter Useful life (years) MV at end of useful life - $1,500 Challenger Purchase price Installation cost Annual expenses Useful life (years) MV at end of useful life $49,000 $5,600 $1,100 in year one, and increasing by $100 per year thereafter 10 $7,000

Explanation / Answer

Statement showing AW

For Defender

For challenger

Thus challenger should be purchased

Particulars 0 1 2 3 4 5 Total Opportunity loss of selling price -37900 Upgrade cost -2000 Annual expense -1200 -1296 -1400 -1512 -1633 Salvage value -1500 Total cash flow -39900 -1200 -1296 -1400 -1512 -3133 PVIF @18% 1.0000 0.8475 0.7182 0.6086 0.5158 0.4371 Present value -39900 -1017 -931 -852 -780 -1369 -44849 PVIFA(15%,5 years) 3 AW -14342

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.