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Asheet metal fabrication plant in the province of Quebec studying a replacement decision for its old laser market studies, the old laser cutting machine will have to be replaced some time before the end of the fourth year (from now) The market value of the old laser cutting machine is currently estimated at $49.000. Other related data for the old laser cutting machine are summarised in the ble below. The MARR is 10% Remaming service Salvage value Operating and life in your (S) maintenance cost (5) 0 19.000 31.500 17,000 19.875 21,320 15,656 26 806 6,242 33,774 2 a) Determine the EAC (quivalent Annual Cost) for the old laser cutting machine over one year, two years, three years and four years of remaining service life (12 Marks) b) Determine the remaining economie life of the old laser cutting machine. (5 Marks) e) If the EAC of the new laser cutting machine is $35,000, should the plant replace the old machine with the new one now? (5 Marks) d) What could be considered as a "sunk cost" in this example? (Hint: no calculations are needed) (3 Marks) A sheet metal fabrication plant in the province of Quebec s studying a replacement decision for its old ser cutting machine, purchased 7 years at S130,000, with a new more precise laser cutting machine. Based on market studies, the old laser cutting machine will have to be replaced some time before the end of the fourth related data for the old luser cutting machine me sucer curred in the table below. The MARR IS 10%. i other Operating and maintenance cost (5) Remaining service Salvage value life in years (5) 0 49,000 1 31.500 2 19,875 3 15.656 4 6-742 12,000 21,320 26,806 33,774 a) Determine the EAC (Equivalent Annual Cost) for the old luser cutting machine over one year, two years, three years and four years of remaining service life. (12 Marks) b) Determine the remaining economic life of the old laser cutting machine (5 Marks) c) Ir the EAC of the new laser cutting machine is 535,000, should the plant replace the old machine with the d) What could be considered as a "sunk cost" in this example? (Hint: no calculations are needed). 3 Marks) new one now? A sheet metal fabrication plant in the province of Quebec is studying a replacement decision for its old laser market studies, the old laser cutting machine will have to be replaced some time before the end of the fourth year (from now). The market value of the old laser cutting machine is currently estimated at $49.000. Other related data for the old laser cutting machine are summarized in the table below. The MARR is 10% life in years Operating and maintenance cost (S) Remaining service Salvage value (S) 0 49,000 1 31,500 2 19.875 3 15,656 4 6,742 17,000 21,320 26,806 33,774 a) Determine the EAC (Equivalent Annual Cost) for the old laser cutting machine over one year, two years, three years and four years of remaining service life. (12 Marks) b) Determine the remaining economic life of the old laser cutting machine. (5 Marks) c) If the EAC of the new laser cutting machine is $35,000, should the plant replace the old machine with the new one now? (5 Marks) d) What could be considered as a "sunk cost" in this example? (Hint: no calculations are needed)

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