Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 44

In 2008, Amphenol Industrial purchased a new quality inspection system for $550,000. The estimated salvage value was $50,000 after 8 years. Currently the expected remaining life is 3 years with an AOC of $27,000 per year and an estimated salvage value of $30,000. The new president has recommended early replacement of the system with one that costs $400,000 and has a 5-year economic service life, a $45,000 salvage value, and an estimated AOC of $50,000 per year. If the MARR for the corporation is 12% per year, find the minimum trade-in value now necessary to make the president's replacement economically advantageous.