Calculate annual worth of the defender at interest rate

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Reference no: EM131999938

An equipment was purchased three years ago for $80,000 with a useful life of 5 years with a $9000 salvage value. Increased demand necessitated an upgrade costing $30000 one year ago. Technology changes now require that the equipment be upgraded again for another $25,000 so that it can be used for 3 more years. Its annual operating cost will be $48,000 and it will have a $19,000 salvage value after 3 years. Alternatively, it can be replaced with new equipment that will cost $68,000 with operating costs of $35000 per year and a salvage value of $21,000 after 3 years. If replaced now, the existing equipment will be sold for $12,000. Calculate the annual worth of the defender at an interest rate of 12% per year. Calculate the AW of the selection (Challenger or Defender) over 3 years at an interest rate of 12%.

Reference no: EM131999938

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