Flilane Tire Company Needs to Overhaul Its Auto Lift System

question 134

Essay

Flilane Tire Company needs to overhaul its auto lift system or buy a new one.The facts have been gathered,and they are as follows:
$$\begin{array} { | l | r | r | } \hline & \text { Current Machine } & \text { New Machine } \\\hline \text { Purchase Price, New } & \$ 123,750 & \$ 162,800 \\\hline \text { Current book value } & 36,850 & \\\hline \text { Overhaul needed now } & 30,250 & \\\hline \text { Annual cash operating costs } & 69,300 & 52,800 \\\hline \text { Current salvage value } & 44,000 & \\\hline \text { Salvage value in five years } & 8,800 & 38,500 \\\hline\end{array}$$ Required:
Which alternative is the most desirable with a current required rate of return of 15%? Show computations,and assume no taxes.

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Definitions:

Sleep Duration

The amount of time spent in various stages of sleep during a typical sleep cycle, including both REM and non-REM sleep.

N2 Sleep

A stage of sleep characterized by sleep spindles and K-complexes, marking a deeper sleep than N1 and preceding the deeper states of N3 and REM sleep.

REM Sleep

A unique phase of sleep in mammals and birds, characterized by rapid movement of the eyes, low muscle tone throughout the body, and the propensity of the sleeper to dream vividly.

Sleep Spindles

Bursts of oscillatory brain activity visible on an EEG that occur during stage 2 of NREM sleep, believed to play a role in learning and memory consolidation.