get partial credit for each question. You must show the calculations involved Yo

Question

get partial credit for each question. You must show the calculations involved You may either use an excel spreadsheet for your answers, or you may perform them with a calculator in the space below. (A) Your company purchased a piece of equipment four years ago. Because of the high maintenance costs for this equipment, a new piece of machinery is being considered, per the table below Calculate EUAC of the old equipment (defender) and new equipment (challenger). Which alternative do you select? Ctr Answer Box: La N study period MARR = i = Pon-original price of old equipment four years ago- MVon market value of old equipment now M02 = market value of old equipment in 6 years = Original estimated life of old equipment Annual Maintenance costs of old equipment for the next 6 years 6 years 12% $12,000 $5,000 $500 10 years $750 $10,000 $2,500 Pn price of new equipment now Mvn2 = market value of new equipment in 6 years Original Estimated life of new equipment Annual Maintenance costs of new equipment for 6 years $150 the next 6 years Page 1

Explanation / Answer

Old Equipment New Equipment Initial cost 5000 10000 (Current MV) Salvage value 500 2500 Equivalent Uniform Annual Initial Cost: = Initial cost/PVIFA(12,6)=Initial cost/4.1114 = $         1,215.36 $   2,430.72 Annual Maintenance cost $             750.00 $       150.00 Equivalent Uniform Annual Salvage Value: = Salvage value/FVIFA(12,6) = Salvage value/8.1152 = $               61.61 $       308.06 EUAC (Equivalent uniform annnual initial cost+Annual maintenance cost-Equivalent uniform annual salvage value) $         1,903.75 $   2,272.66 Alternative to be selected is the DEFENDER (Old Equipment) as it has lower EUAC.

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