chapter_13_replacement

chapter_13_replacement - Chapter 13 Replacement Analysis...

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Copyright Oxford University Press 2009 Chapter 13 Replacement Analysis
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Copyright Oxford University Press 2009 Replacement Problem Replacement Analysis Decision Maps Minimum-Cost Life Marginal Cost of Keeping an Asset one more year Replacement Analysis Techniques Replacement Repeatability Assumptions After-tax Replacement Analysis Spreadsheet and Replacement Analysis Chapter Outline
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Copyright Oxford University Press 2009 Recognize and develop replacement problems Use the decision map to select the appropriate replacement analysis technique to apply Calculate the minimum cost life of an asset Apply replacement analysis techniques correctly Perform replacement problems on an after-tax basis Use spreadsheet in solving replacement analysis problems Learning Objectives
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Copyright Oxford University Press 2009 Vignette: The $2 Billion Upgrade In February 2003, Intel Corp. announced the $2 billion project to upgrade its silicon wafer plant in Arizona. The upgraded plant will use newer processes that allow chips to hold smaller and faster transistors. Overall, the project will allow Intel To manufacture 300-mm chips, rather than 200-mm chips To double the manufacturing capacity To reduce manufacturing costs
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Copyright Oxford University Press 2009 Vignette: The $2 Billion Upgrade Because of cost savings, Intel made the decision to upgrade existing facilities versus building new ones. Search on internet for building new plants in different types of industries. When companies upgrade existing production assets, they may not scrap their current assets. Why? List 3 economic and 3 non-economic factors that may have been at the top of Intel’s list. When companies build new plants, they often built outside U.S. What are the ethical impacts that should be part of the decision process?
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Copyright Oxford University Press 2009 Should the existing equipment be retained or replaced? The “Defender” is the existing equipment. The “Challenger” is the best available replacement equipment. If the defender proves more economical, it will be retained. If the challenger proves more economical, it will be installed. Replacement Analysis
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Copyright Oxford University Press 2009 Obsolescence occurs when an asset’s technology is surpassed by newer and/or different technologies (PC) Depletion is the gradual loss of market value of an asset as it is being consumed or exhausted (Oil well, Timber) Deterioration is the general loss in value of an asset due to aging process (Production machinery) The Replacement Problem
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Copyright Oxford University Press 2009 Planned replacements can be scheduled to minimize the time and cost of disruptions. Variations of replacement problems, such as
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This note was uploaded on 02/09/2011 for the course ENGR 110 taught by Professor . during the Spring '10 term at UCLA.

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chapter_13_replacement - Chapter 13 Replacement Analysis...

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