Fundamentals of Engineering Economics 3rd Edition by Chan Park

Exercise 2

Macintosh Printing Inc. purchased a $20,000 printing machine two years ago. The company expected this machine to have a five-year life and a salvage value of $5,000. Unfortunately, the company spent $5,000 last year on repairs, and current operating costs are now running at the rate of $8,000 per year. Furthermore, the anticipated salvage value has now been reduced to $2,500 at the end of the printer's remaining useful life. In addition, the company has found that the current machine has a book value of $14,693 and a market value of $10,000 today. The equipment vendor will allow the company the full amount of the market value as a trade-in on a new machine. What value(s) for the defender is (are) relevant in our analysis?