Bruin Manufacturing Is Evaluating Whether It Should Retain Its Current

question 7

Essay

Bruin Manufacturing is evaluating whether it should retain its current environmental test chamber and room or sell it immediately and purchase a new one. The relevant costs are shown below. The current one can be kept for another 5 years, given that an additional maintenance cost of $500 each year is provided each year. Determine whether the current equipment should be replaced. Use a before- tax MARR of 13% per year and the annual cost method. $$\begin{array} { | l | l | l | } \hline & \text { Defender } & \text { Challenger } \\\hline \text { Capital investment, } \$ 3 \text { years ago } & 33,000 & -\\\hline \text { Capital investment, } \$ & - & 38,000 \\\hline \text { Annual operating expenses, } \$ & 5250 & 5450 \\\hline \text { Annual maintenance, } \$ & 500 & -\\\hline \text { Current market value } & 13,000 & -\\\hline \text { Estimated salvage value at the end } & 1500 & 23,000 \\\text { of } 5 \text { additional years } & & \\\hline\end{array}$$

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Definitions:

Episodic Memory

A variety of enduring memory that encompasses the remembrance of particular incidents, circumstances, and personal encounters.

Semantic Network Model

A conceptual framework that represents relationships among ideas or concepts in a network of interconnected nodes, often used in cognitive psychology and information science to illustrate how knowledge is structured and accessed in the mind.

Animal

A living organism characterized by voluntary movement, responsive to environment, and having specialized sensory organs.

Fish

Aquatic vertebrates that have gills throughout life and limbs, if any, in the shape of fins.