An existing robot can be kept if $2,000 is spent now to upgrade it for future service requirements. Alternatively, the company can purchase a new robot to replace the old robot. The following estimates have been developed for both the defender and the challenger. The company's before-tax MARR is 15% per year. Based on this information, should the existing robot be replaced right now? Assume the robot will be needed for an indefinite period of time.
Defender
Challenger
Current MV
$37,000
Purchase price
$55,000
Required upgrade
$2,000
Installation cost
$6,000
Annual expenses
$1,600
$1,100
Remaining useful life
5
Useful life
9
MV at end of useful life
−$1,600
$6000
The AW value of the defender is
The AW value of the challenger is
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