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...


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



Annual expenses



​$1,100



Remaining useful life



5


years

Useful life



9


years

MV at end of useful life



−​$1,600



MV at end of useful life



​$6000




The AW value of the defender is


The AW value of the challenger is



Jun 09, 2022
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