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6.1 The Crocobeach Hotel is considering replacing an industrial oven system of their kitchen. The purchase cost of a new one will be $122,000 and will have lower maintenance costs per year compared with the older one. The current machine can be sold for $52,000 now. The salvage value and maintenance costs per year are listed below for both alternatives. Assume a 3-year useful life and the MARR is 8%. EOY 0 1 2 3 Old Machine New Machine Salvage Value Maintenance Costs Salvage Value Maintenance Costs 52,000 $ $ 122,000 $ $ 46,000 $ 7,000 $ 110,000 $ 2.800 $ 39,600 $ 10,200 $ 105,000 $ 3,900 34,000 $ 12,400 $ 98,000 4,500 a) Calculate the Marginal Cost of the Old machine (Defender). Which replacement analysis technique will you use and why? (10 points] EOY S Value at EOY Loss in Market Interest Interest in Year Value Rate N Maint. Cost Total Marginal Cost 0 1 N 3 b) Find the EUACs of the Capital Recovery for new machine (Challenger). [10 points] EOY S Value at EOY P-S (A/P,8%,N) Si CR EUAC 0 1 2 2 3 c) Find the EUACs of Maintenance Cost for new machine (Challenger). [10 points) d) Find the Total EUACs of the two altematives (8 points) e) When (Economic Life) should the old machine be replaced? Why? (2 point] 6.1 The Crocobeach Hotel is considering replacing an industrial oven system of their kitchen. The purchase cost of a new one will be $122,000 and will have lower maintenance costs per year compared with the older one. The current machine can be sold for $52,000 now. The salvage value and maintenance costs per year are listed below for both alternatives. Assume a 3-year useful life and the MARR is 8%. EOY 0 1 2 3 Old Machine New Machine Salvage Value Maintenance Costs Salvage Value Maintenance Costs 52,000 $ $ 122,000 $ $ 46,000 $ 7,000 $ 110,000 $ 2.800 $ 39,600 $ 10,200 $ 105,000 $ 3,900 34,000 $ 12,400 $ 98,000 4,500 a) Calculate the Marginal Cost of the Old machine (Defender). Which replacement analysis technique will you use and why? (10 points] EOY S Value at EOY Loss in Market Interest Interest in Year Value Rate N Maint. Cost Total Marginal Cost 0 1 N 3 b) Find the EUACs of the Capital Recovery for new machine (Challenger). [10 points] EOY S Value at EOY P-S (A/P,8%,N) Si CR EUAC 0 1 2 2 3 c) Find the EUACs of Maintenance Cost for new machine (Challenger). [10 points) d) Find the Total EUACs of the two altematives (8 points) e) When (Economic Life) should the old machine be replaced? Why? (2 point]

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