Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 3

Herald Richter and Associates, 5 years ago, purchased for $45,000 a microwave signal graphical plotter for corrosion detection in concrete structures. It is expected to have the market values and annual operating costs shown below for its remaining useful life of up to 3 years. It could be traded now at an appraised market value of $8000. A replacement plotter with new Internet-based, digital technology costing $125,000 has an estimated $10,000 salvage value after its 5-year life and an AOC of $31,000 per year. At an interest rate of 15% per year, determine how many more years Richter should retain the present plotter. Solve
a) by hand and b) by using a spreadsheet.