Homework Answers
Option (c).
Maximum repair cost is equal to PW of the new machine.
For new machine, net first cost = $44,000 - $15,000 = $29,000
PW ($) = - 29,000 + 6,000 x P/A(12%, 5) = - 29,000 + 6,000 x 3.6048 = - 29,000 + 21,629 = - 7,371
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