Calculate value of the difference in annual costs

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Reference no: EM131603122

Machine A was purchased three years ago for $35,000 and had an estimated MV of $3, 500 at the end of its 10-year life. Annual operating $3,000. The machine will perform satisfactorily for the next seven years. A salesperson for another company is offering Machine B for $42,000 with an MV of $7,000 after 10 years. Annual operating costs will be $2, 400. Machine A could be sold now for $27,000, and MARR is 15% per year. Compare the before-tax equivalent uniform annual cost, EUAC, of the defender (keeping Machine A) to the challenger (buying Machine B). To answer this problem, calculate the value of the difference in annual costs: EUAC (challenger)-EUAC(defender) = EUAC (Machine B) - EUAC (Machine A). (Enter your answer as a number without the dollar $ sign.)

Reference no: EM131603122

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