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Bruin Manufacturing Is Evaluating Whether It Should Retain Its Current

question 7

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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.  Defender  Challenger  Capital investment, $3 years ago 33,000 Capital investment, $38,000 Annual operating expenses, $52505450 Annual maintenance, $500 Current market value 13,000 Estimated salvage value at the end 150023,000 of 5 additional years \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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