Quiz10_Spring08

# Quiz10_Spring08 - 10 5 50,Q(W;= 160,000 o 150,000 50,000...

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CHEE 5369/6369 Quiz # 10 (closed book) Tuesday April 8,2008 A lumber company that cuts fine woods for cabinetry isevaluating whether it should retain the current bleaching system or replace itwith a new one. The relevant costs for each system are known or estimated. Use an interest rate of 10% per year to: 1 . Perform the replacement analysis. 2. Determine the minimum resale price of the current system needed to make the challenger replacement choice now. Is this a reasonable amount to expect for the current system? First cost of current system 7years ago, \$ First costof new system, \$ Remaining life, years Market value of current system \$ AOC, \$ per year
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