Net present cost of the preferred alternative

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Reference no: EM131912393

An existing asset that cost $17,000 two years ago has a market value of $12,000 today, an expected salvage value of $2,300 at the end of its remaining useful life of six more years, and annual operating costs of $2,900. A new asset under consideration as a replacement has an initial cost of $10,800, an expected salvage value of $5,500 at the end of its economic life of three years, and annual operating costs of $2,500. It is assumed that this new asset could be replaced by another one identical in every respect after three years at the same initial cost of $10,800, if desired. Use a MARR of 16% to determine if the existing asset should be replaced immediately. Assume the project that uses the asset will last for 6 years from today. Enter the NET PRESENT COST of the preferred alternative."

Reference no: EM131912393

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