MS303_Assignment+11

# MS303_Assignment 11 - 9.28 refer to PROBLEM 9.9 Before-tax MARR= Challenger Installation cost= Economic life= Market value EOY 12= Annual expenses=

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Before-tax MARR= 15% per year Challenger: Installation cost= \$30,000 Economic life= 12 yrs. Market value EOY 12= \$2,000 Annual expenses= \$16,000 Defender: Present BV= \$6,000 Present MV= \$4,000 Data for the defender for the next 3 years are: Year MV at EOY BV at EOY 1 \$3,000 \$4,500 \$20,000 2 \$2,500 \$3,000 \$25,000 3 \$2,000 \$1,500 \$30,000 Percent Change in Annual Expenses of Defender= 0.70% EOY, k MV Expenses CR Amount TC_k PW_k EUAC_k 0 \$4,000 1 \$3,000 \$19,860 \$1,600 \$21,460.00 -\$18,660.87 \$21,460.00 2 \$2,500 \$24,825 \$950 \$25,775.00 -\$38,150.47 \$23,466.98 3 \$2,000 \$29,790 \$875 \$30,665.00 -\$58,313.21 \$25,539.84 "Use NPV "Use PMT Challenger: function" function" EUAC_12 (15%)= \$21,465.46 "Use PMT function" EOY, k 0 1 \$21,460 < \$21,465.46 EUAC of Challenger 2 \$25,775 3 \$30,665 if the sign is > then replace the defender immediately, if the sign is < then the replacement would be delayed by at least one year. Expenses during

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## This note was uploaded on 03/17/2012 for the course MS 303 taught by Professor T during the Spring '12 term at Sabancı University.

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MS303_Assignment 11 - 9.28 refer to PROBLEM 9.9 Before-tax MARR= Challenger Installation cost= Economic life= Market value EOY 12= Annual expenses=

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