Question

The replacement of a planning machine is being considered by the Reardorn Furniture Company. (There is an indefinite future need for this type of machine.) The best challenger will cost $35,000 for installation and will have an estimated economic life of 14 years and a $2,000 MV at that time. It is estimated that annual expenses will average $17,000 per year. The defender has a present BV of $6,000 and a present MV of $4000. Data for the defender for the next three years are given below. Using a before-tax interest rate of 10% per year , make a comparison to determine whether it is economical make the replacement now. Year MV at End of BV at End of Expenses during Year the Year Year $4,500 3,000 $-1,000 $20,000 2 -1,500 26,000 3 1,500 -2,000 32,000 Click the icon to view the interest and annuity table for discrete compounding when i= 10% per year. Fill in the table for the EUAC values for the defender for years 1-3. (Round to the nearest dollar.) EUAC Year 1 2 $ 3 $

Answer 1

Represent the formula excel sheet as follows:

$2Q==$

Represent the table showing the calculations as follows:

Thus, the EUAC for three years is as follows:

Year	EUAC
1	$25,400
2	$25,876
3	$27,832