9-10. An existing robot is used in a commercial material laboratory to handle ceramic samples in the high-temperature environment that is part of several test procedures. Due to changing customer needs, the robot will not meet future service requirements unless it is upgraded at a cost of $2,000. Because of this situation, a new advanced technology robot has been selected for potential replacement of the existing robot. The accompanying estimates have been developed from information provided by some current users of the new robot and data obtained from the manufacturer. The firm’s before-tax MARR is 25% per year. Based on this information, should the existing robot be replaced? Assume that a robot will be needed for an indefinite period. (9.4, 9.7)

 

Defender

 

Current MV                            $38,200

Upgrade cost (year 0)          $2,000

Annual expenses                  $1,400 in year one,

and increasing at the

rate of 8% per

year thereafter

Useful life (years)                  6

MV at end of useful life       −$1,500

 

Challenger

 

Purchase price                      $51,000

Installation cost                    $5,500

Annual expenses                 $1,000 in year one, and

increasing by $150 per

year thereafter

Useful life (years)                 10

MV at end of useful life      $7,000

 

Alpha Geek

(8)

Status NEW Posted 21 May 2017 05:05 PM My Price 8.00

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