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Razorback Corp. is evaluating whether it should keep its automatic guided vehicle or sell it immediately and purchase a new one. The current vehicle can be sold for $28,000 now; however, with an overhaul of $8250, the current vehicle can last another 5 years. Other relevant costs are shown below. Use a before-tax MARR of 5% per year and determine whether the current vehicle should be replaced.
Table below:
Defender Challenger
capital investment, $ 34250, 5 years ago 38250
Annual operating expenses, $ 5500 7800
Useful life, years 10 12
Estimated salvage value at the 2500 5500
end of useful life
Sagot :
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