Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 21

A civil engineer who owns his own design/build/ operate company purchased a small crane 3 years ago at a cost of $60,000. At that time, it was expected to be used for 10 years and then traded in for its salvage value of $10,000. Due to increased construction activities, the company would prefer to trade for a new, larger crane now that will cost $80,000. The company estimates that the old crane can be used, if necessary, for another 3 years, at which time it would have a $23,000 estimated market value. Its current market value is estimated to be $39,000, and if it is used for another 3 years, it will have M O costs (exclusive of operator costs) of $17,000 per year. Determine the values of P, n, S, and AOC that should be used for the existing crane in a replacement analysis.