Question

13-37 Big-J Construction Company, Inc. is conducting a routine periodic review of existing field equipment. They use a MARR of 20%. This includes a replace- ment evaluation of a paving machine now in use. The machine was purchased 5 years ago for $200,000, The paver's current market value is $65,000, and yearly operating and maintenance costs are as follows. Year, n Operating Maintenance Market Value Cost in Cost in if Sold Yearn Yearn in Yearn 1 2 3 4 5 17,000 20,000 25,000 30,000 35,000 12,000 18,000 20,000 25,000 30,000 50,000 40,000 35,000 30,000 25,000

please show how to solve this in Excel. I posted the Excel sheet format it should look like

Answer 1

since at year 4 , marginal cost is incresed from EUAC of challenger, at this time,i.e. at year 4 , machine shall be replaced

Year Operating Cost Maintenance cost Market Value lost Market value lost Interest Total Margnal cost UwN 17000 20000 25000 30000 35000 12000 18000 20000 25000 30000 50000 40000 35000 30000 25000 15000 10000 5000 5000 5000 13000 10000 8000 7000 6000 57000 58000 58000 67000 76000