55-year 15. A specialty concrete mixer used in construction was purchased for $300,000 7 years ago. It is MAC property. Its annual O&M costs are $105,000. At the end of an 8-year planning horizon, the mixer will have a salvage value of $5,000. If the mixer is replaced, a new mixer will require an initial investment of $375,000, and at the end of the 8-year planning horizon, the new mixer will have a salvage value of $45,000. Its annual O&M cost will be only $40,000 due to newer technology. Use an EUAC measure, a tax rate of 40 percent, and an after-tax MARR of 9 percent to perform an after-tax analysis to see if the concrete mixer should be replaced if the old mixer is sold for its market value of $65,000. a. Use the cash flow approach (insider's viewpoint approach). (11.2.2) b. Use the opportunity cost approach (outsider's viewpoint approach). (11.3.2)

55-year 15. A specialty concrete mixer used in construction was purchased for $300,000 7 years ago. It is MAC property. Its annual O&M costs are $105,000. At the end of an 8-year planning horizon, the mixer will have a salvage value of $5,000. If the mixer is replaced, a new mixer will require an initial investment of $375,000, and at the end of the 8-year planning horizon, the new mixer will have a salvage value of $45,000. Its annual O&M cost will be only $40,000 due to newer technology. Use an EUAC measure, a tax rate of 40 percent, and an after-tax MARR of 9 percent to perform an after-tax analysis to see if the concrete mixer should be replaced if the old mixer is sold for its market value of $65,000. a. Use the cash flow approach (insider's viewpoint approach). (11.2.2) b. Use the opportunity cost approach (outsider's viewpoint approach). (11.3.2)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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