Razorback Corp

question 2

Essay

Razorback Corp. is evaluating whether it should keep its automatic guided vehicle or sell it immediately and purchase a new one. The current vehicle can be sold for $28,000 now; however, with an overhaul of $8250, the current vehicle can last another 5 years. Other relevant costs are shown below. Use a before- tax MARR of 5% per year and determine whether the current vehicle should be replaced. $$\begin{array} { | l | l | l | } \hline & \text { Defender } & \text { Challenger } \\\hline \text { Capital investment, } \$ & 34,250,5 \text { years ago } & 38,250 \\\hline \text { Annual operating expenses, } \$ & 5500 & 7800 \\\hline \text { Useful life, years } & 10 & 12 \\\hline \begin{array} { l } \text { Estimated salvage value at the end } \\\text { of useful life }\end{array} & 2500 & 5500 \\\hline\end{array}$$

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Definitions:

Board Of Directors

A group of individuals elected to represent shareholders and oversee the management and policy decisions of an organization.

Priority Directors

Directors within a corporation or board who are given precedence for specific tasks or decision-making processes.

Government Agencies

Organizations established by a government to carry out specific government functions.

Small Businesses

Enterprises with a small number of employees and relatively low volume of sales.